Every organisation needs a Mervyn Davies. Someone with positive energy, enthusiasm, an ability to make things happen and to spot talent who will follow them. He’s the epitome of a glass-half-full kind of person – and UK business could probably benefit from a few such leaders in these uncertain times.
Lord Davies of Abersoch is a 67-year-old pocket rocket, dressed in an Ozwald Boateng suit, casual but very soigné John Smedley polo neck and suede Chelsea boots (all British designed and made). In his youth, Davies might have been described as “nattily dressed”. He has a glint in his eye and a bright Hollywood smile.
Davies is a grandee of UK business with a CV as broad as it is long. As well as commanding big day jobs at Standard Chartered, first as CEO and then chairman, and working in government as trade minister during the post-2008 financial crisis, past and present chairmanships include Jack Wills, private equity outfit Corsair Capital, Mikhail Fridman’s LetterOne, the Lawn Tennis Association and the Royal Academy. He has been a non- executive director of Tesco and Diageo, is a senior advisor to Teneo, a board member at Tottenham Hotspur and a member of the World Rugby executive committee.
The list goes on: Davies chairs a biotech business in Cambridge making ground-breaking medical instruments for surgeons. And he owns a vineyard with a very nice house attached in the Luberon, Provence. His Domaine des Jeanne rosé was served at the party that celebrated his chairmanship of the RA. Davies found time to perform some limbo dancing at this event – there are pictures to prove it.
“I’ve got a zest for life,” he says. “I cram a lot in. But I make a point of only doing things I like.” Davies has just been boxing with his personal trainer – there is no spare tyre around his midriff. Does he let the guy punch him in the head? “No! We only do sparring.”
Davies is supremely politic. If you ask him for an opinion on something ticklish/political, he’ll respond that the subject is “way beyond his pay grade”. The truth is, very little is beyond his pay grade and his experience means he will have a fully justified opinion on most things. But Davies is mindful of what happens to those who shoot their mouths off in print, unaware of the possible consequences.
To begin, as Dylan Thomas wrote, at the beginning. Davies was born in North Wales in 1952 to a very Welsh family – he didn’t speak English until he was seven. His father was a bank manager at the Midland. The biggest shock the young Davies delivered to his family occurred when he married an English girl.
In typically decisive fashion, he proposed marriage three days after his first date with Jeanne, a fashion designer from Liverpool. Davies followed his father into the bank straight from school, was fast-tracked and rose very quickly. But then he did the unheard of by jumping ship for American institution Citibank. Being a bank manager might, in those days, have meant taking your place among the doctors and solicitors as a pillar of middle-class society but you were never going to make a shedload of money. And he’s certainly made a lot since.
Living in London’s Blackheath, Davies remained at Citibank for a decade as managing director, learning the ropes of international finance. In 1997 he got a call from Sir Malcolm Williamson, then the group CEO of Standard Chartered, and off he went. Davies became a member of the executive management team, first in Singapore and then Hong Kong. He travelled widely in India and China, where he experienced the extraordinary growth of those countries’ economies but also the wild ride of Asian stock markets that, on one occasion, dived 40 per cent in a few days. Davies became CEO in 2001 after a boardroom bust-up and was named chairman in 2006.
China and Hong Kong (where his daughter lives and works) clearly remain of particular interest to Davies. He says: “You underestimate the power of the Chinese economy at your cost. They’ve taken hundreds of millions of people out of poverty. But how do you modernise and allow more freedom of expression under the same model? I don’t know the answer to that.” And which side is he on with regard to the political clashes over Hong Kong’s future? “I’ll choose my words very carefully,” Davies says.
“I served on the Hong Kong Monetary Authority for seven years. I love the place. It’s a very rich city with 450bn under management but with terrible levels of housing security, poverty and disadvantage. You’ve got to fix that. You cannot have a million people living in poverty or below. Never mind one country, two systems.” One assumes he would have chosen his words equally carefully if Management Today had asked him about the response to the coronavirus outbreak that first engulfed China then spread worldwide.
Davies may be a glass-half-full kind of guy but he’s also cautious. “When I became chairman of Standard Chartered, I had a sense that risks were going crazy in banking,” he recalls. “Pay was far too high. I capped bonuses, sold our exposure to hedge funds. In 2007 I looked a prat. But the next year proved me right.” And 2008 did indeed reveal many bankers to have been seriously lacking in judgment.
As the financial crisis deepened, the Labour government approached Davies to ask if it could enlist him to help the country weather the storm. After a phone call from Gordon Brown one Friday night, Davies called a family conference over a curry to weigh up the pros and cons of saying yes.
He was appointed minister of state for trade, investment and business and was part of the team that put the UK back together again, working with Peter Mandelson, Alistair Darling and Ed Miliband. When asked by the FT what it was like, he remarked: “It was scary and another world. Now with the benefit of 20 years’ hindsight, Davies says: “It was the unquestionable highlight of my career. I was totally out of my comfort zone – each day those red boxes contained unknown things for me. I got to work with such talented and committed politicians and civil servants. They gave me a lot of freedom. I was able to give something back.”
So many business people have had a bad time when they switched to politics but not Davies. “I cannot agree with this current fashion of kicking the civil service,” he says, although he adds: “Sure, it’s true that government doesn’t have enough business knowledge and [Jeremy] Corbyn has no interest in capitalism whatsoever. Attacking every business, every industry is what happens at the moment.”
Davies says he has voted for every party in his time and that he’s a Labour supporter on social policy and a Conservative on business and the economy. Having been a Labour peer, he’s now a cross-bencher and bowed out of government when Labour lost the 2010 election. He disapproves of what came after: “I think austerity has taken a terrible toll on the weaker parts of society. For them to take the brunt of public expenditure cuts sat very badly with me.”
Talking of which – Brexit. Davies was a remainer but is now a pragmatist and cannot see any point in being bolshy or even vengeful in defeat. So when the French foreign minister says the negotiations mean the two sides will be “ripping each other apart” isn’t he fearful?
“The referendum was a lesson in campaigning and how to handle the modern electorate – Remain failed,” says Davies. “We’ve just got to move on and get over it. Focus on the positive without recrimination. The EU needs us and we need them.” But what about his grandchildren and the engagement with Europe that they are now likely to be denied? “We’re at the beginning of a massive industrial revolution. This is the moment. We’ve got to get on with it.”
London’s ill-fated Garden Bridge is probably the only disastrous project in which Davies has been involved – he chaired the trustees of the charity that was to have built it. The brainchild of Joanna Lumley and Boris Johnson in 2013, the project was cancelled in 2017 but not before £43m of public money had drifted off down the Thames. The ins and outs are lengthy and complex but the trustees never won the PR battle in the bridge’s favour. Even the FT decided it was a bad idea when, in all likelihood, the bridge would have been a success had it ever been constructed.
“I look back on it with nothing but pride,” says Davies. “We were victims of a change of London mayor, prime minister and chancellor. We raised all the private money we were supposed to.” It must have been a bruising experience and Davies says it will have negative consequences: “In the future it will be very difficult to persuade trustees to get involved with these sorts of things. Private-public partnerships like this need certainty from the beginning.”
He makes an important point. A number of senior individuals – not all by any means very wealthy – gave up thousands of hours pro bono to the Garden Bridge project, and they raised more than £100m from donors. Some of those may feel sore after the sharp criticism they faced, particularly from the built-environment press.
It also illustrates a problem in which the British specialise: dithering over big infrastructure projects – HS2 and Heathrow’s third runway being the supreme examples. “We’re a wonderful, magical nation but we do faff about,” says Davies. “Look at the negativity before the Olympics and what a success that proved.”
Davies is also bullish on another subject that can be equally polarising – the future of private equity, despite its reputation as an arcane art and the recent moanings of Guy Hands, chairman and founder of private equity firm Terra Firma. Hands, the FT reported, hit out at fellow dealmakers for becoming too focused on how much money they make and inhabiting a culture that is “not fit for purpose for the world we now live in”. The industry, he said, had become too insular: “We tended to only talk about ourselves – the funds we raised and the pay cheques received.”
“I’ve been in it for 10 years. It modernises and has a far longer-term view of the businesses it owns than people realise,” counters Davies. “It’s public markets that are shrinking. There is extraordinary wealth held by high net worth individuals, sovereign wealth funds and other institutions and it’s going to private markets. They can’t be doing with the excess bureaucracy and box ticking in public companies. If this goes on, the talent won’t gravitate towards them, either. If private equity has a problem it’s that there are far too few women at the top.”
This is certainly not the first time he’s pointed to the lack of women in senior positions. Tasked by the government to lead a review of the number of women in boardrooms, his first report in 2011 recommended FTSE 100 companies should be aiming for a minimum of 25 per cent female board members by 2015 – a target that was reached six months early. His final report in 2015 proposed raising this to 33 per cent for all FTSE 350 boards by the end of this year. The work continues through the Hampton-Alexander Review, which last month announced the FTSE 100 index had reached the target almost a year early. There’s still work to be done but it’s a significant improvement on the 12.5 per cent figure for female board members when Davies first started his work. That’s not a bad legacy.
So, if he could go back and start again, would Davies take the same path? Would he still go into banking? “No,” he says. “I’d be an entrepreneur. I very nearly did it in my early 20s, when I came across an air conditioning and heating company I could have bought. But I didn’t make the leap.” Somehow Lord Davies the aircon mogul doesn’t quite have the same ring to it.
This piece first appeared in the March 2020 print edition of Management Today.
Image credit: Julian Dodd