Outlook: Giving Russell the push doesn't solve anything at Boots

Crédit Lyonnais; Psycho drama

The skids have been under Stephen Russell, chief executive of Boots, for so long now that the only real surprise in the announcement that he's going is that it took the chairman, John McGrath, so long to axe him. Perhaps wisely, Mr McGrath has decided to axe himself as well, so that there will soon be a completely new partnership at the top of Britain's biggest chain of chemists.

The City shouldn't be too hard on Mr Russell, who has struggled with his strategy to take Boots into "well being" services but before that had done a good job as managing director of the bit that makes all the money, the chain of chemists. Nor was there anything particularly wrong with the well being concept. The problem was that it was over-hyped as a way of seeing off the ever more aggressive assault by the big supermarket chains into Boots' traditional markets. The stores are on the whole too small to accommodate dentistry, aromatherapy and the rest. Even now, two years into the experiment, no one would think of visiting a Boots outlet for any of these things.

Meanwhile, the supermarkets have continued to chip away at Boots' core market, and in what looks uncomfortably like a repeat showing of what happened at Marks & Spencer, the stores have begun to look down at heal and out of date. The smaller stores seem never to have what you want when you go into them, while the queues for prescription medicines can sometimes make you feel as if you are living in East Berlin before the wall came down. While pursuing his pretensions as a lifestyle guru, Mr Russell became neglectful of his traditional franchise.

Even so, there will be no easy solutions or magic wands for whoever succeeds him. Stuart Rose, the former Arcadia and Argos boss, might reasonably think he'd be pushing his luck by taking up such a challenge. The supermarket groups are unrelenting in their assault, having recently added the new challenge of high street convenience outlets to the existing competition of larger supermarkets. Boots still faces the prospect of slow death by a thousand cuts, as WalMart and Tesco apply their buying power to drive prices on core health and beauty products ever lower.

If you cannot beat them, join them is the philosophy behind the joint venture with Sainsbury's under which Boots becomes a store within a store, responsible for all the supermarket's health and beauty products. The concept is being trialled in nine supermarkets, but needs Office of Fair Trading approval as well as final agreement on who gets what from the partnership for a more generalised rollout.

Sir Peter Davis, chief executive of Sainsbury's, once entertained hopes of a full-scale takeover of Boots, but these days he is as much caught in the WalMart/Tesco pincer movement as Boots itself. It is easy to see why Sir Peter might think a problem shared is a problem halved. Unfortunately it would be much more likely to end up a problem doubled. Restoring Boots to its rightful place at the top of the retail pile will take imagination as well as drive. Such executives aren't exactly thick on the ground. Anna Mann (see below) will need all her skills to find one.

Crédit Lyonnais

Along with Fred Goodwin, chief executive of Royal Bank of Scotland, Michel Pebereau, chairman of BNP Paribas, is one of the very few European banking chiefs to have demonstrably created value through a hostile takeover bid. First came M. Pebereau's acquisition of Paribas. Then there was the bid by "Fred The Shred" for National Westminster Bank. Both were textbook examples on how to extract value. Crédit Lyonnais, who most people will remember as the bank that had to be bailed out by the French state after the last recession, was to have been M. Pebereau's next target, but now Crédit Agricole has marched in to upset his plans.

Crédit Agricole is an extraordinary beast by Anglo-American standards. Only quite recently floated on the stock market, it is essentially a federation of some 45 mutually owned regional banks. The holding company owns 25 per cent of each of the regional banks who in turn own 75 per cent of the holding company. The bid for Crédit Lyonnais is bank rolled by the cash-rich regional banks, who have underwritten a rights issue to finance the mainly cash offer.

The whole thing is a triumph of corporate empire building over any notion of shareholder value. Crédit Agricole is bidding so high that the deal is earnings dilutive in year one. It only becomes earnings accretive thereafter by making some heroic assumptions about the scope for synergy benefits. Needless to say, there won't be anything quite as vulgar as job losses.

No significant problem with regulators is anticipated, despite the fact that the combined behemoth would be streets ahead of its nearest rival with more than 30 per cent of the French retail market. BNP is not yet entirely out of the picture. Crédit Agricole is such an unwieldy animal, and its paper understandably commands so little respect in the capital markets, that its bid may not fly. Already two of the regional banks are refusing to partake in the underwriting. M. Pebereau may not need to match or outbid Crédit Agricole's term. It would rather undermine his rhetoric if he did. In any case, he may need to do no more than stand and wait. The chances of the Crédit Agricole offer falling apart look high.

Back on this side of the Channel, Fred Goodwin too must be starting to wonder what he might do for an encore. Fresh from a set of results which defied the bad debt experience reported by others, he has little left to prove, but that never stopped anyone. There's no chance of an assault on Europe – that's far too risky – while he is already too big to allow another takeover in Britain. The US beckons. America has traditionally been a graveyard for British banks, but RBS has already made a number of successful forays and may soon be ready to build on that achievement.

Psycho drama

SHL Group is in the business of psychometric testing, but you wouldn't believe it given the humdinger of a row that has broken out on its board. SHL's products are meant to test for intemperance of this sort. Not so in this case.

In one corner stand the company's two founders, now non executive directors, backed by the employment agency Manpower. In the other stands the chairman, Neville Bain, and his chief executive, John Bateson, both of whom have passed all the psychometric tests the company could throw at them with flying colours. Each faction wants to sack the other, and an extraordinary general meeting is being convened for the day before Christmas Eve to settle the matter once and for all.

The two sides bill the row as one with wider ranging corporate governance implications. The non execs, each with substantial shareholdings, say they should be allowed to sack an underperforming management. The chairman and chief executive say it was the founders that caused the present trading problems, which the present chief executive is left trying to sort out. Moreover, the founders cannot be seen as genuinely independent non executives because A, they used to run the company, and B, they are big shareholders. Indeed, the whole case is a lesson in why former executives should not be allowed to carry on at the company they used to run.

At this stage it is hard to know how the votes might stack up, but presumably the big outside shareholders will largely side with the incumbent management. Hermes has already said it will. In any case, I'm not sure there are significant corporate governance issues involved here. The founders and non execs are as keen to see their shares start performing again as anyone. No impropriety has been alleged by either side. This is merely a dispute about how best to run the company.

jeremy.warner@independent.co.uk