Sir Victor Blank wants to be loved. For that reason alone, it's hard not to feel sympathy for someone who believes totally that he engineered a deal that in time will prove to have been in the best interests of Lloyds, the bank he chaired but had to resign from when its shareholders were less than impressed. They didn't see what he saw: that the merger with HBOS will create a powerhouse in UK banking, that the pain of absorbing a deeply troubled HBOS and sacrificing Lloyds' long reputation for conservatism was a price worth paying.
The manner of his going also hurt. Blank, 66, is one of those who will be forever associated with the credit crunch - a banker who has been accused of taking a good bank, Lloyds, and turning it into a bad one, Lloyds-HBOS.
After the deal was done, it was disclosed that HBOS had lost £10.8bn in 2008. Under the banks' recapitalisation scheme, the Government took a 43% stake in the group. The dividend, much treasured by shareholders in the old Lloyds TSB, was scrapped. Investors rounded on Blank: in May, he said he'd be stepping down. As he did so, the EC warned that Lloyds may be stripped of the Halifax business as punishment for requiring billions in government loans.
We're sitting in what remains his office inside the gleaming modern Lloyds headquarters in the City. The view from his eighth floor window to St Paul's is impressive. So too is the long wall, filled with framed cuttings, pictures and drawings from a long and mostly glorious career. His support staff beaver away, serving the wishes of 'MVB', as they refer to Maurice Victor Blank.
It's hard to imagine that soon, and certainly by the time you read this, he will have gone. The memorabilia on show will be boxed up and sent to his splendid 16th-century manor house near Oxford, and someone else will be sitting at this desk. That someone is the new Lloyds Banking Group chairman, the quiet, internationally respected Sir Win Bischoff from Citigroup.
There's an endearing directness and openness to Blank. He's certainly groomed and polished, in both appearance and manner; but he has one of those big, rumpled faces that can't hide emotion. He exudes pain and pride in equal measure.
'What we did back in September last year was absolutely unquestionably the right thing to do, and it was, despite everything that has been said, properly reviewed. It was properly diligenced, it was properly put together. I said to somebody the other day it was done by the book, and I should bloody well know, because I wrote the book. You know, Weinberg and Blank on Take-overs and Mergers.' (Before becoming a banker he was a lawyer and co-authored, with Sir Mark Weinberg, the standard text on M&A.)
The use of 'we' is deliberate. Blank feels strongly that although he was chairman, he has been portrayed as having acted on his own. It has not gone unnoticed in some quarters, either, that whereas Blank has carried the can, Lloyds' CEO Eric Daniels has emerged more or less unscathed and continues in post.
Blank is far too proper to point an accusing finger at others, but it's possible to identify a sub-text that says he was not alone. 'It was so right, because we had spent a long time reviewing strategically the future of this group, which was prudently and conservatively managed, and seen by some people as a bit dull. But dull is not a bad thing. However, opportunities to grow abroad were limited - it's very difficult to buy something at a high price overseas and then make money out of it. And we were restricted in what we could do in the UK because of the competition rules. We had, in my time, three strategy awaydays which looked at what we most wanted to do - and that was to buy HBOS.'
Adding HBOS had first come up in 2000, he says. 'The two chief executives exchanged letters - should we merge?' In other words, some six years before Blank joined, Lloyds and HBOS were considering getting together.
The deal was revived when he arrived, 'because I knew Andy Hornby (the HBOS CEO). But we all agreed the competitive environment wouldn't allow it to happen. Then, in the turmoil of the summer of 2008, it seemed clear that something had to happen with HBOS, that this presented us with an opening.'
HBOS was in deep trouble. 'Its share price was flagging, the markets were in turmoil and the inter-bank lending market was closing. So Eric Daniels picked up the phone to Andy Hornby and started the conversation. My role in it, as chairman of the board, was to make sure we did everything in the right way, and I also used an opportunity to talk to the prime minister, to raise with him how consolidation of the banks would benefit the Government.'
That 'opportunity' presented itself on a trade mission to the Middle East with Gordon Brown. He has known Brown for years. He'd deny that he is a crony, but he is a businessman who can easily get the PM's ear - not least because, before Lloyds, Blank was chair of Trinity Mirror, publisher of the Labour-supporting Daily Mirror.
In a one-to-one chat on the aircraft, he told Brown that it was important that the country avoid another Northern Rock, a reference to the holed Newcastle bank and how it was becalmed for nine months while its future was deliberated.
A quicker way forward, suggested Blank, one that might avoid a major government rescue, was consolidation - such as Lloyds stepping in to save HBOS. However, the banks could not wait for a competition investigation to be carried out - the situation was so grave that an instant remedy had to be found. 'He (Brown) asked Sir Callum McCarthy (departing chair of the Financial Services Authority) to come and see me, and somewhere within Whitehall and the FSA this was all discussed and sorted out.'
Then, at a cocktail party held by Citigroup at Spencer House in St James's, Brown and Blank had another chat. 'The PM said he thought that the Government might be able to legislate to allow the merger to happen,' says Blank.
Also present that night was Daniels. He and Blank stepped outside while Daniels smoked a cigarette. So there they were, the chairman and CEO of Lloyds ruminating on a colossal deal involving two of Britain's biggest business names, as they stood on the street in St James's. Recalls Blank: 'And then Eric picked up the phone to the HBOS people to negotiate an arrangement, which he brought to the board.'
The reaction to the takeover is easily forgotten now. When the news broke, the prevailing view was that Lloyds had scored a coup, that Blank had called on his friendship with the PM to grab himself a bargain. The talk was all about the creation of a 'superbank', one that would swamp the High Street.
It took place against a backdrop of the banks being required by the Treasury and the Financial Services Authority (FSA) to strengthen their capital base. 'The world was going to change,' says Blank reflectively. 'What then also happened was that from mid-October - which was the weekend that all the banks saw the Treasury and were told what was needed - until really the end of March, the next two quarters, the economy fell off the scale.' Nobody, he says, expected it - not the chancellor, the Bank of England, the FSA, nobody. 'I doubt you expected it, Chris,' he says, fixing me with a stare. I have to agree.
Caught in this firestorm was HBOS, especially the Bank of Scotland itself, which during the boom had been making enormous profits from commercial lending, mostly to the property sector, and now saw values plummeting. The bank, says Blank, 'suffered terrible losses above what we were expecting. Share prices fell - everybody's share price fell. There was a lot of looking at the deal and questions being asked like "Do these guys know what they're doing?".'
He did, and he wants to say so. 'You and I understand there was a lot of value lost, and I have always made it clear that I am deeply sorry, particularly for small shareholders. But you don't judge a massive strategic move six weeks after the deal has been completed.'
He shifts in his chair and spreads his arms. 'You have got to give the merger time. But people didn't want to give it time, and there was a lot of focus on the personalities, on me and Eric, and that was clearly going to go on. It took the focus away from what we needed to do. I was up for re-election at the AGM and I probably would have got re-elected, but decided the right course was to say that I would ensure there was an orderly process of succession.'
I venture that there are those who maintain that not enough due diligence was done, that Lloyds really did not know in detail what it was buying. There was due diligence, he insists. 'We knew some of the stuff that was in there and it came through quicker than we anticipated, but it doesn't take away the benefits of acquiring the Halifax and Bank of Scotland franchises.'
The Blank mantra is that, down the road, HBOS will turn out to be the great buy Lloyds assumed it to be when it was first mooted. Only time will tell ... If Lloyds had pulled out, he stresses, 'the Government would have had to nationalise HBOS. The consequence of that for the UK banking system would have been dire.'
Blank disputes the notion that the combined bank will dominate and enjoy unfair advantage. 'Okay, we're number one in lots of markets, but not massively ahead of other banks. Look at the competition that's around, at Barclays, RBS, HSBC and the Santander group, and then Tesco and Sainsbury. This is not an uncompetitive landscape: there is plenty of choice out there.'
On Tesco, isn't it remarkable how, not so long ago, the supermarket chain and its peers were being portrayed as the embodiment of evil, and now that has changed completely, and the banks have taken their place? 'One of the things that really gets me annoyed is the thought that all bankers are somehow at fault. If you look at where the problems occurred, they were all in investment banking. It's not the people who are on the front line, who are lending money to you and me, who are providing a service on current accounts and credit cards and personal loans and insurance and so on. They're bankers too, you know; what have they done wrong?'
As for rebuilding trust, says Blank, 'you have to find where the problem lies. My view is that it's probably very concentrated in the investment banking area and we should examine what went on there. The solution which the prime minister advocates is that bonuses should be made long-term and based on historical performance. And that makes sense.' He smiles. 'How you are going to enforce it is another question.
'We've also got to make sure we don't have headlines saying banks are "socially useless", because they ain't,' he adds. 'We provide bank accounts to people who would not otherwise have one. We give to charity. We provide a very important social function. Again, I make a distinction between retail banking and investment banking activities, which are very different.'
It doesn't help, says Blank, that 'we are in the run-up to an election where everybody is competing for votes and some normally sensible people are saying: "Let's do something about this." It is deeply unfortunate.'
But he's got the politicians' ear. Can't he say to them: 'Hang on a minute, this is going too far'? Blank's face wears a resigned expression. 'I have said it to both the main party leaders, because I do believe we're in danger of damaging a very important part of the economy. We have moved from a manufacturing-based to a service-based economy, of which financial services plays a vital part. To damage that by slagging off all bankers seems unconstructive. And to create an environment where the centre of excellence that we have got in the City of London is under threat from people moving elsewhere is unhelpful.'
Blank is in no doubt. 'We should be doing all we can to make sure that London is the main world financial centre. What would discourage people from coming here is if we put some kind of artificial cap on bonuses. It is ludicrous.' He rolls his eyes heavenwards.
'You can't run a competitive business that way. On the other hand, to create an environment where short-term bonuses produce short-term profits, where there is going to be risk in the portfolio, is wrong. It is elementary. You hope that all boards - whether from overseas banks or UK banks - do adopt some sensible principles.'
He laughs and tells a tale about how banking has changed. 'You know, when I got married, my wife (Sylvia) and I opened a joint bank account for the home. Later, my wife was terribly worried: she said she had got a bank statement and there was £50 missing. I said I had drawn some cash out. She said: "I can't work like this, I need to know where I am." So I said: fine, we'll put the account in your name. So she rang the bank manager and said: "You know that joint account we've just opened? Can we have it just in my name?" Five minutes later, I get a phone call from the bank manager saying: "Victor, is everything alright at home?".'
It's not like that today. He accepts that 'it's not realistic with a global industry and the range of products we supply', but he believes the banks are realising the error of their ways. 'They are coming back from the highly computerised and impersonal service that they've been providing.'
Blank was born in Stockport, south of Manchester, in 1942. His grandparents were Russian Jews who 'walked off a boat at the turn of the last century with few possessions and no English'. His grandfather was a tailor and they settled in Bann Street, Stockport. Blank mentions the location because today it's home to 'something called the metropolitan borough council ethnic diversity service'. Yet he has never regarded himself as anything other than British.
His father took over the firm, turning it into a gentlemen's outfitters in the town centre. Blank went to a C of E school, even though he was Jewish, took a scholarship to the local grammar and then went on to Oxford University - 'where I not only studied, but imbibed, English history'.
He'd always wanted to be a solicitor and decided to train and get experience in London. He joined Clifford-Turner (later one half of Clifford Chance). 'I suppose I was conscious of - but also wonderfully unworried about - being one of the very, very few Jews there.'
He was made a partner at 26, the youngest in the firm's history. At the partners' meeting that decided to promote him, 'one of the group of white, pinstriped, middle-aged Englishmen tuned to another and said: "Does it matter that he's Jewish?" The answer, unhesitatingly, was no, and they moved on.'
Blank tells this tale not because he feels hard done by as the victim of prejudice but quite the reverse. 'It's less important what it says about me - I am no brighter or more gifted, no more ambitious or insightful than countless of my other countrymen or women - than what it says about Britain. It's about "tolerance" and "openness" and "freedom" and "opportunity" - which, to a sceptical 21st-century ear sound like empty cliches. Not for me. They're precisely the things that have allowed me to become all that I am.'
His journey is crucial in understanding him. He became a hugely successful City lawyer, specialising in takeovers, and went on to head corporate finance for a merchant bank, Charterhouse (he led the buyout of Woolworth's), and then to chair a variety of firms and organisations: GUS, Trinity Mirror, the DTI's Industrial Development Advisory Board - and Lloyds.
He's rich and he's knighted. As the picture gallery in his office testifies, he moves easily among the powerful and starry. But he has never deserted his boyhood teams - Manchester United and Lancashire County Cricket Club - or his past. 'If you say: where are your real roots, where did you get your values, where were you brought up, where did you get all your formative experiences? ... It was there, and that's all pre-business.'
His mother died from ovarian cancer when he was 12. Every year, he and Sylvia hold a celebrity cricket match at their country house in aid of the Wellbeing of Women health charity. Blank captains one team and Sir David Frost the other. The turnout of cricket stars - Lancashire heroes Mike Atherton and Clive Lloyd are among his closest friends - and figures from entertainment, industry and the City is impressive and testament to Blank's formidable contacts book.
He is speaking in the knowledge that soon he'll have to vacate this chairman's office and stand down from what is still a large and vital organisation. He is going in circumstances not of his choosing (he volunteers that he is not receiving a payoff, nor does he have a pension pot).
What is he going to do? 'Well, I haven't stopped and thought about it,' he says, unconvincingly. 'I am an adviser to Texas Pacific Group (the private equity house), I am a business ambassador for the UK, I have some charitable projects - and now I've got some time. I think the experience I've got and the judgment that most people in business will pass on me mean I could still make a contribution in the business world.' The sadness in the room is palpable. 'I'd have loved to have been here to see it all come right, and it disappoints me not to be.'
But, he stresses: 'It was and is a very good deal. The extraordinary downturn has made it difficult for people to recognise that in the short term. But you've got to wait, to ride on for two or three years, to see the benefits come through.' And people forget that 'it's a deal that could only have happened in adversity'.
He says it again, so that there's no mistake: 'This wasn't my deal, it wasn't Gordon's deal; it was the Lloyds board's deal. The board here wanted to buy HBOS because they saw a great opportunity - which it is - and the Government wanted to get stability in the financial sector through consolidation rather than having to pick up any more banks.'
What occurred afterwards is a blip. 'It's a big blip, but it won't take away the fact that we have created a major financial institution.'
He stands up and proffers his hand: we're done. We shall see. What we don't know either is what the future holds for Victor Blank.
FOUR CHALLENGES FACING BLANK
1. To secure the chairmanship of another major FTSE 100 company
2. To restore his reputation in the eyes of the City as a reliable pair of hands and a smart dealmaker
3. To move on mentally from Lloyds-HBOS and let Sir Win Bischoff take command
4. To be able to say 'I told you so' to Lloyds shareholders, when, in three or four years, the share price climbs to pre-merger levels
BLANK IN A MINUTE
1942: Born 9 November, Stockport, Cheshire. Educated at local grammar school and Oxford University
1963: Trainee at City solicitors Clifford-Turner
1969: Made the firm's youngest-ever partner at 26. Specialising in corporate law, co-writes the definitive book on takeovers
1981: Head of corporate finance at Charterhouse merchant bank
1985: Heads Charterhouse, gaining a City following as master strategist and dealmaker
1996: Retires from Charterhouse as chairman. Holds directorships of a number of FTSE 100 companies, including the chairmanship of GUS and of Trinity Mirror
2006: Member of the council of Oxford University and the Financial Reporting Council. Becomes chairman of Lloyds TSB Group
2009: Merges Lloyds with HBOS. Announces departure in May and leaves in September