Profile: Richard Meddings, group FD at Standard Chartered Bank

‘Relatively straightforward.’ Who could imagine ever hearing those words to describe the first bank bail out in October of last year. But they come from Richard Meddings, group FD at Standard Chartered Bank, and one of the key players in what became known as the ‘crisis cabinet’ that, over the course of seven days, formulated the first bailout package for UK banks.

That package totalled £500bn of guarantees, loans and included the initial £50bn investment in UK banks.

When announced on 8 October by Alistair Darling it seemed anything but ‘straightforward’, but even now six months on, with the immediate threat of catastrophe gone, it is remarkable that Meddings is so composed about the whole episode.

When asked what it was like, being at the turning point in an historic crisis, his first thought is to recall that there were plenty of other people there working on the same problem along with the Treasury, including his boss and Standard Chartered CEO Peter Sands, colleagues Averina Snow and Macer Gifford, plus trusted advisers and friends Robin Budenberg and David Soanes of UBS. Meddings is nothing if not modest about his role. So in dealing with the question he ends up being very brief.

‘Actually it was relatively straightforward. It was hard work, it was quite intense.’

He adds: ‘For us, it was very practical advice.’ Then: ‘I think it’s probably far harder, far less calm for the politicians who have to stand up and drive that through and then represent it.’

There is obviously a natural reserve about Meddings. Self-effacingly he even reveals that his wife jokes that she thinks he’s Mother Theresa since it became known he was involved the bail out. But there would be plenty crow about. Not only was he at the heart of plans to rescue the UK’s main banks, but Standard Chartered, while not completely immune from economic turmoil, has ridden the storm reporting in March a jump in pre-tax profits of 13% to £3.2bn.

In conversation Meddings comes across as making a determined effort to keep his feet planted firmly on the ground. He is serious, thoughtful and gives the air that, though fully aware that the UK banking system was close to the abyss, he was unruffled. But, despite his initial calm reserve, there is a willingness to talk that suggests it plays on his mind more than he might care to let on.

He became group FD at Standard Chartered in 2006 after spells as group executive director for growth and governance across Africa, the Middle East, Pakistan, Europe and the Americas, and time as group executive director with responsibility for risk, group special assets management and legal compliance.

Before that he was at Barclays as chief operating officer for private clients and group financial controller. He was also group FD at the Woolwich. Meddings qualified with ICAEW while at Price Waterhouse in 1983.

Shock to the system

Whether any of that prepares you to save the banking system of an entire country is anybody’s guess but Meddings and his CEO were among the first to act on fears that the system needed urgent attention. And moreover to begin putting a proposal together.

Meddings uses the analogy of a ‘defribulator’ used to ‘shock the system back’ to describe what they believed needed doing. Capital, funding and liquidity needed to be sorted fast. For the whole system.

‘When we did get engaged with the government it was because actually we were only a few days away from a potential collapse of the system.’ And by that Meddings means a widespread run on the banks. He says: ‘Those were pretty challenging, chilling times.’

What happened next was that Meddings and Sands sat down on Wednesday 1 October with colleagues to figure out how a rescue plan might work. The next day they invited in government minister Shriti Vadera and the day after that Standard Chartered wrote a plan and handed it over to government. That plan formed the basis of the first rescue.

‘We explained what we thought the issues were and we brain-stormed the types of thinking that we had, and compared and contrasted with what ideas we were learning and basically mounted an argument that it was really urgent that we moved fast on a multiple basis, all in one go.

‘And it had to be done very, very quickly… the risk was up so high that you could have a real, sudden fall,’ says Meddings.

Despite all the criticism that has followed, Meddings only has praise for the way ministers reacted at that time saying ‘that was really good executive government’.

There is a hint from Meddings though that it wasn’t only the banking system at stake. As simple as he might make the whole thing sound (‘it was actually, what does a bank need…that was very practical’) it did edge towards becoming personal.

When he describes the crisis as ‘chilling’ it is in the context of concern for living with his family in the UK. But there’s something else that played a part for Meddings as a professional banker trying to build a life raft for other banks – reputation.

‘The big judgment was whether you could truly say…yes, we absolutely believe it will work. In other words, if you follow this we will give you our reputation, we think this will be enough, this will do it, this way of thinking will be sufficient.’ This is presumably why Meddings stresses, more than once, that there were many people involved in formulating and honing the rescue package. Many people taking the same risk.

Reputation could also explain his reaction to the vilification of bankers in the wake of the crisis. Our discussion takes place after all the attention on Sir Fred Goodwin, the former chief executive of Royal Bank of Scotland, and his pension. His house had just been attacked too.

Does Meddings feel embarrassed about being a banker? ‘No…there are two or three ways to answer that. One, I’m the CFO of a very good bank providing an excellent range of services to its customers, a bank that isn’t in any difficulty, has got good momentum.

‘Secondly, I think there has been an over-victimisation of the bankers generally. Yes, there has been some egregious behaviour, and much of it I think attaching to…the investment banking models and organisation structures…but there is that victimisation of bankers which I think has actually gone, in many ways, too far, or is not discriminating enough about where the fault really lies.

‘Then, thirdly, a modern economy won’t run without a banking system and what banks do is they leverage capital to provide credit capacity – they manage the velocity of deposits… and the fundamental thing we do is provide a maturity transfer. So, I can lend you money for 25 years through your mortgage in exchange for other people who give me short-term money.

‘Modern economies wouldn’t work without that banking system, so I think it’s a good business to be in. It’s an important business to be in for the good of economies, for our society, frankly, to function, and I think we all need to calm down. But, clearly recognising, and being deeply apologetic for, how it’s gone wrong. But not simplifying the causes of how it’s gone wrong.’

The conversation ranges over regulation (‘regulators were looking in the wrong direction’) and whether investment banking should be separated from retail banking (‘I think the mistake is to think in terms of separating organisations’), but it’s Meddings’ remarks that seem to reveal most about the way he sees himself and his role.

‘It has become very pressured… it’s a hard factual, numbers-based role, which… requires a strong work ethic. I think the role of a CFO is obviously soul and conscience and worrier. There’s a high anxiety content and one of the challenges of the job is always how to do that and not over-display it because it’s a role where you have to exude confidence and decisiveness.

‘But at the same time I think the challenge is always to say what is the horizon showing me, what is happening here and are my colleagues seeing that. It’s a very interesting time to be in a bank, and CFO in a bank and, as I say, it’s good to be with Standard Chartered.’

Why standard chartered didn’t go toxic

‘Much of those assets that exploded with high leverage were lightly regulated, and with light capital requirements under them, were held in wholesale banks and arguably traded between the financial institutions themselves.

‘That wasn’t a business that we had any material interest in. What they built was off-strategy for us… what we constantly ask ourselves about is, does that fit strategy? There are lots of things you might want to do, but fundamentally does it fit strategy? If it doesn’t there’s a risk profile to it ie. the risk of the unknown, the risk of lack of familiarity.’

Meddings adds: ‘You can get tempted. You can get offered more, we have definitely been offered more to do, offered more things to buy. But our resilience, our caution about straying off-strategy is much, much higher because the world’s so much more dangerous.’