17 August/18 August 2019 ★ FT Weekend 3Life
P
atrick!” hails a friendly voice
behind me as I exit London’s
Victoria Tube station. I’m on
my way to Olivomare, a dis-
creet Belgravia restaurant that
my guest, Sir Win Bischoff, has chosen.
But Bischoff has been on the same Tube
train as me and so the encounter begins
10 minutes early — not over the crisp-
breads and olive oil that we will soon be
sharing, but amid the bustling, fume-
choked streets that lead to our tranquil
lunch location, just around the corner
from Bischoff’s stuccoed home.
The 78-year-old is set to step down in
October as chairman of the Financial
Reporting Council, the UK’s audit regu-
lator, after a half-century career in
finance. He is the epitome of the City
gent, still sprightly and a touch rosy-
cheeked from years of wining and din-
ing. Even without the bowler hat and
rolled umbrella that were the uniform of
Bischoff’s generation when he joined the
merchant bank Schroders in the 1960s,
he seems the embodiment of the old-
school British banker.
Yet appearances can be deceptive. The
German-born Bischoff lacks the Eton
and Oxbridge pedigree of his peers, and
has been a quietly subversive presence at
the heart of the City of London for dec-
ades. Appointed chief executive of Schro-
ders aged just 42, he went on to chair two
of the world’s biggest banks through cri-
sis, though not without controversy. He
has faced squalls, too, at the helm of the
UK’s much-criticised audit regulator— a
complicated final act in a storied career.
As we slip inside Olivomare, Bischoff
explains his choice of restaurant: a seem-
ingly illogical one given that we’ve both
travelled from offices that are barely 300
metres apart in the City of London. But it
was a favourite of Bischoff’s wife, who
died a few months ago.
“Rosemary was a wonderful woman,”
he tells me, and I ask how they met. “It’s
a tale of how duty pays,” he says. “I was
with a previous girlfriend and she asked
me to come and spend the weekend at
her parents’ house. I checked my diary
and discovered I’d already promised to
attend a baptism of a friend’s child.”
With some reluctance, he attended the
christening — meeting Rosemary, the
baby’s godmother, and falling for her
immediately. What about the girl-
friend? “Oh, there were no hard feel-
ings,” he quips. “You see, duty pays.”
We order from the menu, which spe-
cialises in Sardinian seafood— two
starters for him: langoustines and tuna
bresaola. He is watching his waistline,
he says. “And some of the starters these
days are probably the most imaginative
dishes.” For me, a grilled aubergine
salad, then truffle gnocchi. To drink,
just sparkling water — Bischoff belying
his oenophile reputation.
Although he has long been a fixture in
the City, Bischoff’s has been a peripa-
tetic life. He grew up in wartime Ger-
many before his father, a farmer, moved
the family to South Africa and became
an import-export entrepreneur. From
apartheid-era Johannesburg, Bischoff
moved to study at New York University,
then started his career as a Chase Man-
hattan junior. He joined Schroders, at
the time a combined investment bank
and asset manager, in 1966, and would
spend the next 34 years there. But it was
far from the firm’s London base that he
cut his teeth: in 1970, at the age of 29, he
set up its Hong Kong outpost.
An informal roster soon evolved
between three firms in Hong Kong —
Schroders, HSBC and Jardine Fleming —
to ensure that lucrative stock market
floats were spread around. If it sounds
clubby, it was: the 1970s were light on
banking regulation, and all the more so
in Hong Kong. In 1971, it was Bischoff’s
good fortune that it fell to him to float
the nascent property and manufactur-
ing business of Li Ka-shing, now a bil-
lionaire tycoon.
“We divvied them up,” Bischoff
remembers, “and the date that [Li]
wanted [to float], for reasons of feng
shui, was my date... We raised
HK$150m, I think it was, valuing the
business at HK$600m.” For a rookie
banker, this huge deal was a coup.
“Hong Kong was the making of my
career,” he says. In 1984, a year after
returningto London, Bischoff became
Schroders’ chief executive. “Among can-
didates who’d remained in London dur-
ing the 1970s, there was a sense of nega-
tivism. That’s why I think they skipped a
generation and chose me.”
Riding the wave of market liberalis-
ation that came with Margaret
Thatcher’s Big Bang reforms of the City,
Schroders quickly recovered ground
that had been lost to upstart rivals. By
2000, after resisting the incursion of for-
eign banks into the City for longer thanfull backing of the board, and remains
Lloyds’ chief executive to this day.
Bischoff pops a final morsel of his
tuna into his mouth as an exclamation
mark, leaving me ploughing through
my far larger — and pleasantly pungent
— truffle pasta.
By the time the banker retired from
Lloyds in 2014, aged 72, the group had
bounced back strongly. It seemed that
Bischoff was going to leave his banking
career on a high. It didn’t stay that way.
As Bischoff contemplates retirement
proper, he is leftlooking back on more
controversy than he might have hoped.
Just a month after finishing at Lloyds, he
took on the chairmanship of the UK’s
then sleepy audit regulator, the Finan-
cial Reporting Council. When he started
in the job, it looked like a cushy last role
for a financier keen to preserve his sta-
tus in the City. Bischoff disputes this,
saying that he initially declined the role
and had to be persuaded to do it.
Either way, his tenure has been punct-
uated with criticism. During his five
years in charge, the collapse of out-
sourcer Carillionand café chain Patisse-
rie Valeriehave beenlow points. Both
had been the subject of apparently weak
audits (by KPMG and Grant Thornton
respectively) that have so far gone
unpunished by the FRC. Many also dis-
missed an FRC probe into KPMG’s audit
of the pre-crisis HBOS as a whitewash.
Challenged on such issues, Bischoff
looks unusually vulnerable. He fiddles
with the wrapper on the nougat that
comes with his espresso, and avoids my
gaze. “Companies are brought down by
management and boards,” he says. “But
auditors may not have been sceptical
enough.” Slowly he begins to admit the
FRC’s shortcomings and his own inabil-
ity to make a big difference.
“It’s been much harder to get things
done [than I imagined]. Harder to get
things done and harder perhaps also to
seek greater powers. In retrospect
should one have stamped one’s foot and
said, ‘Look, unless we get these bigger
powers, I’m going to resign’? I think
[there’s a case for] far greater, more
intrusive powers in auditors, for us to be
a bit more feared as a regulator.”
His replacement as chairman, former
banker turned GSK finance director
Simon Dingemans, will oversee a tough-
ening of the FRC’s powers and its evolu-
tion into a new body, the Auditing,
Reporting and Governance Authority.A
longside Bischoff’s mixed
record at the audit regu-
lator, legacy issues from his
time at Lloyds have also
come back to haunt him —
particularly the mistreatment of small
business customers following an HBOS
fraud scandal. Two HBOS executives at
the bank’s Reading branch had spent
years taking bribes in exchange for
referring high-risk small business cus-
tomers to associates at a consultancy
firm that then charged the clients high
fees, stripped their assets and sent many
to the wall.
Though this predated Lloyds’ 2009
rescue of HBOS, the bank faced criticism
for its slowness in acknowledging the
seriousness of the scandal. Small busi-
ness owners Nikki and Paul Turner, who
led a campaign for justice, have beenamong those who charged Bischoff, and
other Lloyds directors, with responding
dismissively to their complaints.
Looking cornered again, Bischoff con-
cedes that in retrospect, “one might
have looked at it more closely’’.
I can’t help thinking that his habit of
usingthe indefinite pronoun, so rare in
modern English, is significant. Perhaps
it simply harks back to hisroots: the use
of “man”,the German equivalent, is far
more commonplace. But it does seem to
become a verbal tic when Bischoff is
confronted with an awkwardness that
he would like to divert.
“I wrote to the Turners. I didn’t snub
them,” he insists. “I didn’t meet them
personally ever. But it was looked at.
Perhaps in retrospect one should have
given it more credibility. The other
thing is perhaps one should have had
somebody... a complete outsider look
at it.” In 2017, three years after Bischoff
retired as chairman, six people at the
heart of the fraud were jailed. Two
months later, Lloyds appointed former
High Court judge Dame Linda Dobbs to
conduct an ongoing independent review
of its handling of the HBOS scandal.
There are someresonant positives to
offset the end-of-career negatives.
Bischoff was an early member of the30%Club,agroup that has done much to
advance the careers of women in busi-
ness, and won a reputation for diverse
hiring policies while at Schroders.
Today Bischoff still displays a quiet
wisdom that bullish financiers might do
well to heed. Having been through more
than his share of market crises, he sees
another looming. “The world is highly
geared and highly leveraged,” he says
over his last sip of espresso. “[Money]
needs to find a home. It finds a home in
debt securities, which is astonish-
ing... And we’ve got this very, very odd
thing [of] people going into illiquid
things in order to get higher returns.”
Throughout his 57-year career, he
has hardly slowed down — his only con-
cession being to take Friday afternoons
off in recent years. But that maybe
about to change. His other current role,
chairing JPMorgan Securities, the
European arm of the Wall Street giant,
is due to come to an end next year. So
he’ll properly retire? “Yeah. Well, I
won’t do anything in the public life, like
a big financial institution. I suspect I
may be asked to do something in a not-
for-profit area... Education is proba-
bly the one that I’m most interested
personally in.”
It is hard to credit that one of the big-
gest names in the City — and a wine-sip-
ping, decades-long fixture at Square
Mile social events most nights of the
week — will be departing it for good.
That choice of sparkling water really
was a harbinger of change.Patrick Jenkins is the FT’s financial editor‘Companies are brought
down by management
and boards — butauditors may not have
been sceptical enough’OLIVOMARE
10 Lower Belgrave Street,
London SW1Langoustine £19
Melanzane £12.80
Bresaola di tonno £13.80
Gnocchi £19.50
Sparkling water £4.50
Espresso £3.10
Fresh mint tea £3.30
Total (inc tip) £85.50Lunch with the FTWin Bischoff
‘Money needs
to find a home’
The veteran banker steadied
Citigroup and Lloyds duringthe financial crisis but has
faced criticism for his morerecent record as a regulator.
Over seafood in Belgravia, hetellsPatrick Jenkinsabout the
highs and lows of a 57-yearcareer — and where the next
market storm could hitDrafted in by then chancellor Alistair
Darling to chair Britain’s biggest high
street bank in the wake of its disastrous
HBOS acquisition and subsequent part-
nationalisation, Bischoff was once again
in the middle of a maelstrom. Some
thought him slow to act. For 18 months
he hung on to Eric Daniels, the chief
executive who had led the HBOS deal, to
the irritation of some fellow board
members who privately criticised his
avoidance of confrontation.
So why did he hesitate? “My view was,
I must know a lot more about the com-
pany and how it’s working before even
thinking about [changing the CEO]. We
wanted to have the right kind of person.
And Eric Daniels did actually know
where.. .” The same hesitant tail-off.
The bodies were buried? “The bodies
were buried, exactly.”O
ur mains arrive — too
quickly for my liking, given
the range of topics I’m still
keen to quiz my guest on.
But the restaurant is quiet
and the kitchen is clearly finding it easy
to keep up with the orders.
Lloyds’ appointment of the Portu-
guese-born António Horta-Osórioas
chief executive in 2011 brought Bischoff
a different kind of challenge. Within
months, he realised his new hire was
suffering with stress and exhaustion.
The combination of a looming eurozone
crisis, large volumes of short-term fund-
ing and Horta-Osório’s self-imposed tar-
gets had led to insomniaand ultimately
a breakdown; now he would have to take
an immediate leave of absence.
“This was harder [than the financial
crisis] because the government still
owned 43 per cent [of Lloyds] and we’d
already announced that our chief finan-
cial officer was leaving,” says Bischoff.
He had to oversee operational chal-
lenges and appoint a stand-in chief
executive, while also taking a view on
whether Horta-Osório could defy prece-
dent and return from a mental health
problem to a high-pressure role.
“We got our own doctor,” Bischoff
recalls. “I also said to António, ‘I don’t
want to see your medical records, but
our doctor needs to see them, on a
totally confidential basis. Because at
some time, we’ll need advice.’ The
advice was, [he] could come back from
this.” Horta-Osório did return, with themost, Bischoff struck a deal to sell the
investment banking unit to Citigroup,
leaving the listed Schroders business as
a pure asset manager. In barely 16 years,
he had turned a niche firm, valued at
£112m, into a £4.5bn group that was
selling its banking business for $2.2bn.
But it was between 2007, the start of
the global financial crisis, and 2014,
when the eurozone crisis had abated,
that he had his finest hour. As if to mark
this moment in our conversation, a
waitress delivers Bischoff’s impressive
shellfish platter, leaving my delightful
but humble aubergine dish in the shade.
Bischoff was Citigroup’s regional
chairman in Europe when the wheels
began coming off on Wall Street. In
November 2007, he was plucked from
this position of relative obscurity to
become Citi’s interim chief executive in
New York for a tempestuous couple of
months. Chuck Prince had just been
ejected, having revealed up to $11bn of
losses on subprime mortgages. This was
a mere four months after he had
declared, in a Financial Times inter-
view, that “as long as the music is play-
ing, you’ve got to get up and dance.
We’re still dancing.”
Wasn’t that an absurd thing to say,
even without the benefit of hindsight?
“It is what a lot of us thought,”
Bischoff admits. “But none of us.. .” He
tails off. The subtext, though, is clear
enough: Prince aside, no one else was
silly enough to speak their mind. “But
that was probably the majority view.
That’s what your shareholders expected
of you: the returns [in subprime mort-
gages] were very high... I do remem-
ber [Prince’s comment] very well. We
all remember it very well. Obviously,
Chuck remembers it very well.”
Once a permanent new chief execu-
tive had been found, in former Morgan
Stanley banker Vikram Pandit, Bischoff
was made chairman andoversaw the
first phase of stabilising Citigroup —
even as it came close to collapse, was
part-nationalised and began a radical
programme of shrinkage.
As he polishes off the first of his start-
ers, picking the last of the langoustine
flesh from its shell, I ask Bischoff
whether this was the toughest point in
his career. No, he says. That came a lit-
tle later, when he had returned to the
UK and swapped into the chairman’s
role at Lloyds Bank, at the end of 2009.
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