Ecclestone's Formula One win is not in the bag

Comment

The flotation of Bernie Ecclestone's Formula One may not be quite as close to the starting grid as his financial advisers Salomon Brothers and his fans in the sport and the Press have been telling everyone.

The City had been led to believe that all final obstacles to the float had been overcome. Mr Ecclestone had patched up his row with the leading Grand Prix teams, they had settled for a 10 per cent stake in the quoted company and there was even talk of a prospectus being published by the end of this week. In all, we were told, the flotation would reach the chequered flag by the time of the British Grand Prix at Silverstone in July.

All this is news, it now transpires, to the likes of Williams and McLaren, who have led the rearguard action to stop Mr Ecclestone cashing in his chips without a fairer distribution of spoils to those who actually make this particular merry-go-round rotate - the racing teams themselves.

It now appears that they are holding out for a stake of nearer 20 per cent and still haggling over the details of the Concorde Agreement, which governs how the television revenues are shared out. Some of this may be just bravado, but that doesn't make it any less of a threat to the float.

Even if Mr Ecclestone proves himself as sprightly as Jacques Villeneuve between now and Silverstone, it is hard to see how he can meet his timetable. How could he publish a prospectus - other than one with a health warning on every page - without the agreement of the most important names in the sport?

Mind you, he is doing his best to stifle dissent in the City. It will, by all accounts, be difficult to move at this weekend's Spanish Grand Prix without bumping into an analyst or fund manager there at Formula One's expense. In time-honoured fashion, the sub-underwriting of the offer is being distributed as widely as possible. The same tactics were employed by BSkyB and the water and electricity companies to ensure that their flotations were greeted with maximum enthusiasm in the broking community.

Mr Ecclestone could call the constructors' bluff and press ahead regardless. But could he really float without the likes of Villeneuve, Frentzen, Coulthard and Hakkinen in tow? The constructors' ultimate weapon is to withdraw their teams. Mr Ecclestone is familiar with such tactics. It is what he did at the Spanish Grand Prix in 1982 after falling out with the powers that then ran the sport. So he should know better than most that playing hard ball usually works.

The Bank is better off without this task

First impressions are usually the most lasting, but the more considered second view is often the more reliable. So after the rave first-night reviews of Gordon Brown's latest City drama, Death on Throgmorton St, is there any cause now for a little revisionism. Well actually not very much seems to be the answer.

Eddie George, Governor of the Bank of England, is plainly more upset about the whole thing than we were led to believe on the first night. He still worries about whether this is the right thing to do and is understandably peeved about not being consulted on the speed of it all. If he had been told two weeks ago when operational independence was announced that the quid pro quo was losing supervision, all well and good. But he wasn't. The Chancellor said that reform of City regulation was a longer-term goal after a period of debate and due consultation. Then all of a sudden it becomes immediate. Is Mr George right to be concerned, or is this just pique at being stripped of half his empire?

There is a quite respectable case for arguing that, far from strengthening City regulation, the reforms will actually only lessen the Bank's authority and lead to an inferior form of banking supervision. There is a real danger, moreover, of the SIB evolving into an overly bureaucratic and authoritarian regulatory monster. That would clearly be a very bad thing for the City, significantly undermining its present attractions to international capital and banking. The function of good regulation, it is often said, is to keep the horses under control while not in any way interfering in the race. Certainly the traditionally "light" touch of City regulators has been as much a part of the Square Mile's success as its failings.

Central to this approach is the way the Bank of England exerts informal authority in the City through its supervisory arm. While this may be a peculiarly British way which leaves much to be desired, it none the less seems to work. Remove the Governor's eyes, so to speak, and his eyebrows won't work any more either.

Despite these risks, however, there is every reason to believe that the Bank will actually function rather better stripped of its supervisory role, and that's not just in the conduct of monetary policy.

Shorn of supervision, the Bank can devote all its energies to policy, knowing that it is not going to be diverted every five years or so by some massive banking scandal. Furthermore, the Bank will still retain overall responsibility for financial stability, so that when there is a crisis it will be taking up the reins in dealing with it. In other words it keeps the interesting bits while getting shot of the liability of the donkey work. Just think of it. Next time there's a banking collapse it won't be possible to blame the Bank. Instead the Bank will come waltzing in with the words: "Here's another fine mess the SIB has left us to sort out". Don't knock it Mr George. This seems like a pretty good deal for the Bank.

Less clear is whether the reforms will actually improve the system of supervision. Making sure that they do, and that City regulation continues to be operated in the interests of practitioners as well as consumers, is one for the process of public consultation.

Pilkington chief departs on schedule

The departure of the urbane Roger Leverton as chief executive of Pilkington is one of those stories that seemed so utterly predictable that it becomes hard to register it as a story at all. The writing was on the wall as far back as November last year when the share price first dipped back through the level of the 1995 rights issue. His exit became pretty much inevitable with March's profits warning.

As it happens, the dreadful underperformance of the Pilkington share price is not all down to Mr Leverton. He's been operating in an appaling market place. The price of glass has been falling like a stone for the best part of two years now and the European authorities have meanwhile proved resistant to any co-ordinated approach to dealing with the industry's chronic over-capacity problem.

Even so, when a company is in a fix more can always be done. Mr Leverton plainly wasn't doing it, so Sir Nigel Rudd, chairman of three years standing, felt justified in taking action. Sir Nigel will have to pray that the new man, a vicious cost-cutter out of the same mould as Sir Nigel himself, can do better. Otherwise Sir Nigel too might find himself walking the plank.