Newspaper article The Evening Standard (London, England)

Clever Clogs Adam Falls from Grace and I Have No Sympathy; Crestfallen: Now Adam Applegarth Has to Suffer the Consequences

Newspaper article The Evening Standard (London, England)

Clever Clogs Adam Falls from Grace and I Have No Sympathy; Crestfallen: Now Adam Applegarth Has to Suffer the Consequences

Article excerpt

Byline: CHRIS BLACKHURST

ASK any politician what they fear most and they will say events. HaroldMacmillan, famously, may have said it succinctly but he doesn't hold thefranchise. Neither is the dread confined to Westminsterin the City, too, the sharpest of minds are frequently engaged on worst-casescenarios and disaster planning.

No matter. Then the unexpected comes along and knocks them for six. So it iswith Northern Rock. One minute, Adam Applegarth, the bank's chief executive, isa star of the sector, propelling his Geordie lads and lasses to cocks of thewalk. Next, he's toast.

I don't have any sympathy for Applegarth.

He led his company on a ride that left the rest of the industry gasping andwondering. He screwed up and he must suffer the consequences.

That's businessthat's what he was paid his salary for. "I just don't get offered jobs much anymore, but that's because not many offer bigger pay than here," he once boasted.

No, I shan't shed a tear for him. But what should cause anyone in Westminster,the City or beyond to pause is the nature of Northern Rock's downfall.

Among the banking fraternity, there was much muttering about Northern Rock.Companies are always wary when one of their kind breaks out of the pack andheads off on a storming rise. The first thing the rivals do is question howthey're doing it, how come they're succeeding when everyone else is merelybumbling along, same as before? It's part desire to see if they can be copied,part defence mechanism. Nothing makes a manager more nervous, more vulnerable,than the triumph of others.

There was nothing magical about Applegarth's strategy. He concentrated onlending UK mortgages. Rather than collect his money from customers coming inoff the street, keen to deposit their savings, he went to the markets.

Allied to that, he pursued a relentless policy of ratcheting down costs. Beingbased in the North-East helpedit was Applegarth's proud boast that his bank's wages were 15% less than thoseof a rival in the South-East. …

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