1st February 2016
Alison Carnwath was the first woman to become a FTSE 100 Chairman. She was made Chairman of the Land Securities Group in 2008 and continues to serve in the role today. She was Chairman of the Barclays’ Remuneration Committee until 2012, and today is also a Senior Adviser at Evercore.
Q: How do you see the property markets evolving as interest rates rise?
A: Property markets normally react like any other markets: to supply and demand. At the moment, we are still in a reasonably constrained commercial property market environment and demand is quite high, higher than supply. The supply pipeline looks quite extensive and rich. A lot of that supply pipeline tends never to get built for a variety of reasons, and one of those reasons, traditionally, has been that the developers have not been able to get hold of the finance. However, this time around it’s a little different, because the banks started lending late in the property cycle to developers. Property companies and developers are not really very overleveraged as they were in the last couple of downturns that came, and so the type of interest rate rises that are going to happen, in my comprehension anyway, over the next three or four years, are not really going to have a great effect on what is going on in the property world
Q: Do you think that bonuses at banks should be more closely linked to long term performance?
A: In the days when people were not very mobile in their jobs, perhaps they had two jobs in their life, and they were well trained and well looked after and got promoted within an organisation – and many banks have traditionally been like this – then people would have been very happy and would still be very happy, I think, to take their bonus incentives by way of owning stock in the company. They own this for a long period of time and build up a nest egg, a pension fund, a fund pot, whatever you want to call it, for later on in their lives. These days people want to go into lots of different jobs and learn lots of different things, and so I think, in those circumstances, you can’t really talk about long term incentives for people. People want instant gratification, they want to be paid a proper salary and a proper bonus, and they don’t want to be necessarily linked to their employer. So I’m a bit gloomier than perhaps I might have been five or ten years ago about long term incentives.
Q: How has investment banking changed since you entered the industry? What do you see its future being?
A: Its future is obviously to provide customers with the services they want to enable them to run their businesses properly. Many investment banks also have asset management capabilities, which is another way of effectively investing their customers’ cash in things which they believe are going to provide them with good returns. When I joined investment banking, it was all pretty simple: the derivatives markets were underdeveloped, the advisory market was very important, the broking market dealt with the distribution of stocks and shares, and the investors effectively provided the funds, the pension funds and the life companies. So, the actual investment banking side that I joined was the advisory side of an accepting house, Schroder’s. It’s all got rather complicated. They all went into trading, as opposed to distribution of servicing, or advisory, and that has resulted in a very heavy-handed regulation coming down on them in many different ways, trying to change their behaviours in terms of Dodd-Frank, trying to change their capital requirements to ensure that they don’t have to be bailed out by the state or the taxpayer again. They’re going to have to prune, which many of them have started doing, those businesses where there are no longer the high volumes and where they don’t get high returns, where a lot of capital is required. They’re going to have to prune those businesses, and probably simplify themselves quite a lot. The best banks will still have great entrepreneurs in them, who will think up the next service which their client wants, or the next product their client wants.
Q: What are your views about whether the UK should leave the European Union?
A: I’m currently waiting to hear both sides of the argument. Frankly, I think that the Great British Public will probably be completely confused by the choices in front of them. At the moment, I can’t say that I’m struck by either the pros or the antis’ arguments. I think this is actually a very personal choice for individuals. Older people are likely to want to come out, and younger people are likely to want to stay in, for all sorts of emotional reasons and to keep business as usual. So, at the moment, I’m keeping pretty quiet on this subject.
Q: How do you think progress is going on closing gender inequality in boardrooms?
A: I think gender inequality has made some strides, through the heavy hand of some guidance that started off, really, with the Davies report and the 30% Club. I think there’s been some good progress in terms of the supervisory role of boards. It has been less evident in terms of the executive roles in boards, but that was always going to take longer, and I think that’s going to make some progress. So, I think compared to the last 50 years, it’s done reasonably well. I think the bigger question is the broader inclusion of people from ethnic minorities, people who are at a disadvantage in life. How are these boardrooms going to adapt to a wider group of stakeholders that corporates these days have to be more aware of, and in many cases look after.
Q: Which three books would you recommend to someone my age?
A: Well, Greenmantle [a thriller by the author of The Thirty-Nine Steps, John Buchan]. As it is 2016, I suspect you should read something about Shakespeare and his influence on all subsequent writers. I can’t name a book here, but I suspect you should be reading something from contemporary authors who are writing about what’s going on in the Far East. You should read something contemporary about how the rest of the world is thinking about life, as opposed to just sticking to lists that come out of UK and US publishers.
Q: What life lessons have you learnt over the course of your distinguished career?
A: Number one, always to be decent to people. I’m sure I went through that phase of thinking you could tell people what to do and even be quite harsh with them. I think the honey pot is better than the vinegar bottle, and that comes with treating people fairly and being decent to them. To be determined, because I think if you are ambitious, which I always have been, if you are determined, it is a very good quality to remind yourself that you have.
Q: What did you learn in your teenage years which you think has influenced your success?
A: In my teenage years, I spent a lot of time in Germany. I did a school exchange when I was 14. I was rather impressed and beguiled by the German standard of living and German ambition. So, that resulted in my becoming quite fond of that country, and certainly the people I met over those years. It led to me reading economics and German at university, and I suppose, ultimately, led to me going on the board of BASF, which is a big German chemical company. But I think it was the experience of being somewhere completely outside my family environment, in what appeared to be a safe house.
Q: Is there anything that you wish you had done which you didn’t do when you were my age?
A: No, I can’t think of anything.
Q: Who is the most interesting person you’ve met and why?
A: I’ve been fortunate to meet lots of interesting people. I think probably Meryl Streep, because I’d never met an actress before. She struck me as a perfectly normal person and I had quite a long conversation with her. I think why I found that interesting was I obviously had an expectation of her, and she was quite different to what I had in my mind.