Posts Tagged ‘Goldman Sachs’
Attracted by Super Heroes?
Tuesday, September 21st, 2010
In these uncertain times, substantial comfort is possible from a belief in Super Heroes, not least from the possibility of rescue. High achieving staff and managers are at particular risk of believing their own PR simply because it is easier. Confronting difficult markets and working on those challenging influencing skills is not so easy.
When an entire management team subscribe to the belief, then it often leads to significant trouble. ‘Star’ cultures often make organisations vulnerable.
If the team believe themselves Super Heroes, the resultant loss of contact with the real world leads to significant reputational and other market risk. Goldman’s and Lehmans may be recent examples. Worse is when the customers have bought your ‘Star’ PR taking their business away when the star leaves.
Cultural consequences may include difficulties with motivation and engagement as Super Heroes, (being marvellous), tend not to see the talents of other functions, or to be able to communicate with them. Effective team working will probably prove impossible as the organisation evidently values the Super Hero income earners only. Depending on the tax advice, the result is an atomised group of service companies/consultants with greater or lesser commitment to ‘customer’ satisfaction.
Yet it need not be like this; Super Heroes are capable of and may be encouraged to learn how to both respect and talk to their ‘mortal’ colleagues. Talk to us, in confidence and without obligation about ensuring your Super Heroes develop the competence and confidence to manage in uncertain times.
Quinn & Goldman Sachs – the case for management competence
Tuesday, June 1st, 2010
The extent of the failed insurance company Quinn’s loss leader pricing in the UK is revealed with the branch contributing £44m of the 2009 loss, £28m of that from commercial insurance.
Quinn’s largest creditor, Anglo Irish Bank (AIB) is amongst those expressing an interest in buying the remaining assets and is looking for a JV partner that would be both regulator credible, and could manage the business to recoup some of AIB’s losses.
This smacks of desperation. The business is stopped. In addition to a new investor approval is needed from both Irish and UK regulators for any commencement. Meanwhile staff are queuing up to take redundancy, and competitors are sweeping up the renewals and new business. It is difficult to understand what could be left to salvage – particularly in a market where competition is more than competent and reputation matters.
For AIB this surely underlines its difficulties in understanding the risks it was taking in lending to Quinn. Like RBS and its Goldman Sachs Abacus 2007-AC1 losses, the consequences are significant. The risk assessment was clearly not adequate to protect the interests of the investors. Demonstrating again, that without competent interpretation, data is just numbers.
From the outside it is not possible to differentiate between commission or omission. And what, after all, is the end result difference between the caveat emptor/competent entity justification of Goldman Sachs, and Quinn’s determination to grow its business using other people’s money? Were these investors merely ‘unlucky’ in their timing of their ‘me too’ participation in the Bubble? Did they confuse investment with the CDO/churning and slicing/repackaging of risk activities that others were conducting? Were bonuses paid for the decisions that have broken these banks?
As businesses go forward into the post crunch world, risk can no longer be palmed off onto others or its management delegated to a piece of software. The bottom line is that Management Competence matters, particularly those ‘soft’ skills that enable a business to navigate through uncharted strategic territory.
What are you doing to ensure your teams are competent and confident to deal with the ‘not business as usual’, high uncertainty post credit crunch world?
Next Steps
Talk to us about effective and engaging ways of developing those illusive ‘soft’ skills in high IQ managers and staff.
Credit Crunch Fall Out – why competence matters
Wednesday, May 12th, 2010
What are we to make of the news that Anglo Irish Bank is looking for an insurer to take a 50% share in its indebted client Quinn? The reason is that the bank fears that without an insurance company leading the business, it will not recoup €2.8bn of loans made to the privately held company. The Quinn family has said simply that it will not be able to pay them back. AIB are looking for a company that does not yet have interests in the UK and Ireland – who are presumably willing to take the risk in order to buy into the market.
Quinn are in trouble with the Irish and British regulators because of their lack of capital, and the fact that they have allegedly been growing business by loss leader pricing. Their business methods have raised concern for some time with UK competitors allerting the FSA about unfair competition. Meanwhile the administrators are preparing a prospectus for the sale of the company.
What a heady mix of developing consequences of competence issues – bank and business. And a clear demonstration of the limits of oversight – both regulatory and risk management systems. This particular nightmare has added political colour as communities North and South of the UK/Irish border fight to maintain their jobs, and the Irish State must be groaning at the extent of the outstanding loan.
It begins to put the Goldman Sachs fraud allegations into perspective.
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