Howard Davies: Budapest's sinister steam rooms

MT DIARY: The dangers of being a financial regulator in Hungary. And what happens if La Liga kicks out FC Barcelona?

by Howard Davies
Last Updated: 31 Mar 2016

Fifteen years ago, when I was chairman of the late lamented Financial Services Authority, I hosted a meeting of European regulators at my old Oxford College. We drank college port and went punting.  It was a jolly knees-up for everyone except the boss of the Hungarian FSA, who showed up with one arm in plaster and sporting two impressive black eyes. He explained that he had been beaten up in a public bathhouse, almost certainly by thugs working for a bank, which thought he was asking rather too pointed questions about its risk weighted assets.

So far, this approach to managing regulatory relationships has not caught on over here, fortunately. But one output of the story puzzled me until the other day. What was he doing in a public bathhouse? The idea has a slightly raffish quality in the English context. Weren’t regulatory salaries in Budapest generous enough to afford a flat with running hot and cold?

This month I discovered the answer to my question. We spent the weekend in a crumbling hotel on the banks of the Danube, complete with an ancient spa complex with ornate art deco plunge pools, and a dark steam room in which a careless regulator could easily find himself on the wrong end of a baseball bat. It’s what Hungarians do on a Sunday afternoon, it seems, rather then watching Honvéd vs Ferencváros – a fixture which has not been the same since Puskás passed on.

Another tempting option on a lazy Sunday in Budapest is to argue with an historian. The Prime Minister, Viktor Orbán – he of the famously welcoming attitude to destitute migrants – has provoked a fight with the Hungarian versions of David Starkey. He erected (in the middle of the night) a memorial to the victims of the German occupation of Hungary in the Second World War, which contrives to suggest that all the Hungarians were victims of German aggression, rather than being, until 1944 at least, willing allies of the Nazis under the government of Admiral Horthy.

The monument (which is outstandingly ugly) is now surrounded by a fence hung with disputatious tracts in many languages, aiming to set the record straight, with elderly historians on hand to talk you through them. It is as if Max Hastings were to be found standing in front of the Bomber Harris statue on Fleet Street, explaining to passers-by what Bomber Command did and did not do.

To add to the slightly surreal atmosphere, at the other end of the same small square is the Soviet War Memorial, protected from attacks from the Far Right by a group of Hungarian soldiers, larking about in the sunshine when we passed by. And in front of that is a larger than life bronze statue of Ronald Reagan, striding purposefully towards the memorial with a half-smile on his face, no doubt thinking happily about Star Wars and its impact on the Soviet economy. As a place to reflect on the last 70 years of European history, it has few rivals.

In Barcelona, too, history is on the march. The Catalans have voted in a regional government determined to throw off the Spanish yoke. They did not quite secure a majority of the popular vote, but have a clear plurality of parliamentary seats. They are already planning to set up their own central bank and diplomatic service, and all the other essential accoutrements of a modern state. They have told the central government they no longer recognise its authority.

Madrid doesn’t like it, which is hardly a surprise, and has struggled to find a way of arresting the independence momentum. No political or legal arguments seem to have much impact. They are consulting their constitutional court, but the Catalans say ya boo sucks to that. However, football has come to their aid. The Spanish government has threatened that if Catalonia breaks free, Barcelona can no longer feature in La Liga. Whoops! Would Señor Messi stay at the Nou Camp if he had to play Espanyol, the other team in town, every Sunday until the Champions League gets started? It seems unlikely. And a team without regular competitive fixtures would soon decay, to say nothing of the income lost if there are no more ‘El Clásicos’ against Real Madrid. And indeed would UEFA admit Catalonia anyway, without a time-consuming rigmarole?

So to make Catexit more palatable to obsessive football fans (about 99.99% of the population) and to avoid it becoming a catastrophe for Barca, they have been looking for a Plan B. They asked President Hollande if they could play instead in the French League – now a one cheval race with PSG kilometres ahead – but were greeted with a Gallic shrug and a firm non. Paris has no interest in upsetting Madrid: they need to stick together to defend their inalienable right to run unsustainable fiscal deficits.

The Scottish Premier League might be a better option – Celtic could certainly use the competition, in the continued absence of Rangers. But perhaps something even better is on the horizon. If the Northern Powerhouse achieves full independence one day, Barcelona could join the Lancashire League, which would then be easily the best in Europe. Chelsea are in terminal decline and Arsenal never win the league under Wenger, their manager for life, so little would be lost if Lancashire declared footballing UDI. It’s surely an idea whose time has come. You heard it here first.

Howard Davies is the chairman of RBS. Follow him on Twitter at: @howardjdavies

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