Is boring the new sexy? A long time ago, or so it seems, opaque was opalescent. Do you remember how, in early 2007, we marvelled at the alphabet soup of products banks were cooking up? As outsiders, we might have wrinkled our nose at such terms as CDOs, CLOs, SIVs, conduits and warehouses, but we knew bankers were much cleverer than the rest of us (they were paid so much more after all), so these creations had to be good things. To mere mortals, complex banking was creative, canny and above all glamorous, while the shadowy world of hedge funds and private equity was glamour squared.
Today, mired in recession, with the US unemployment rate hovering at 8%, the US stock market down 50% from its October 2007 peak, and write-downs in the global financial sector estimated at a trillion dollars, we now realize that CDO was either short for ‘can detonate ominously’ or an anagram for ‘cart of dung’.
A more frugal future looms, one where simple is the new sane. And it was in this context that I went to meet António Horta Osório. António is the Portuguese chief executive of Abbey National, now wholly owned by the Spanish financial group Santander.