An Interview with Lord (Mervyn) Davies

Lord Davies

16th December 2016

Mervyn Davies was CEO of Standard Chartered between 2001 and 2006, and then became its Chairman until 2009. He was ennobled that year and was made a Minister of State in Department for Business, Innovation and Skills under Peter Mandelson, with a particular focus on UK Trade, Investment and Small Business. Today, he is the Chairman of the private equity firm Corsair Capital. In 2011 and 2016 he authored government reports about the number of women on boards. 

Q: How easy do you think it will be for the UK to make trade deals post-Brexit? With which countries do you think deals should be prioritized?
A: Well, I think that there is a sadness about Brexit, which is that the full facts for staying in, or indeed for exiting, were not really revealed. I do think one of the big issues that people have to be aware of is that negotiating trade deals – and I was the Trade Minister in Gordon Brown’s government – is a torturous and long process. We have many trading partners, and our biggest trading partner, arguably, is the European market, and then we’ve got the US. So I think that the process of Brexit will not be an easy one, and I wouldn’t prioritise any countries per se. I would just say that the terms of a hard Brexit or a soft Brexit are very unclear, and we’ve got to protect certain industries that are critical to the UK. In that regard, I think the government has a very challenging period ahead of it.

Q: Do you think that, as a result of Brexit, the banking sector in London will move to elsewhere in the EU?
A: I think it depends on the deal. We need freedom of movement for people and goods, and for labour generally. The implications of Brexit are far wider-ranging than simply its impact on the financial services sector. If you go to the NHS, if you go to restaurants, if you go to farms for fruit picking, if you go to a huge range of industries, the British economy is reliant on these 3 to 3.5 million foreign workers that live in the UK. I think the reality is that to be a successful economy, we need to be an open market. We need to attract the best talent. I think that when you look at financial services, it’s a critical industry for the UK, both in terms of tax revenue and strategic positioning. It’s not just the jobs in banks or the currencies centres and Lloyd’s of London, it’s also the jobs that support them, like accounting and law. I think that as we negotiate our exit, it is incredibly important that all the negotiators realize the strategic importance of financial services to the economy.

Q: If a vote on triggering Article 50 comes before the House of Lords, do you think that it should be opposed by peers?
A: Well, if they want to vote to say no, they should. The government and the newspapers keep on mentioning that 17 million people voted to exit, but what they never say is that 16 million voted to remain, and that roughly 12 million didn’t vote. So I think that if peers in the House of Lords or MPs in the House of Commons want to vote against it, they should. I do think that a lot will depend on the terms of the exit, and how long we’ve got to transition out. So obviously, I am massively in favour of the soft Brexit, and I think that a hard Brexit will have disastrous consequences on some of our key strategic industries and on the economy.

Q: What do you think of Theresa May’s first one hundred days as Prime Minister? Do you think that she can make a success of the Brexit negotiations and win the next General Election?
A: Well, I think that that’s a very political question, so I think what I would say is that the very important issue for the government is to keep the country together. Brexit highlighted, as did Trump’s election, the fact that there is a huge part of society that feels they haven’t benefited from the economic success of the last ten or twenty years. Now that’s something that every government has to address. There is too much of a divide in society and my worry about Brexit is that the very regions that will be the worst hit and the very people that might suffer, are the ones who voted for Brexit. So, I wish that Theresa May had uttered a rallying call right at the start of her premiership to bring the country together. It feels as if the government is only interested in the 17 million that voted to exit, and I think that is a mistake. So, I would hope that Theresa May is astute enough to realise that. I think there’s a danger that the Tories move to the right, and Labour has already moved to the left, and the people in the middle feel like they have no voice. I think the other thing that’s very true is that in both in the US election and Brexit, we entered a post-truth era.

Q: Private equity has seen remarkable growth over the past couple of decades. What do you think its future will be, and do you think that the current rate of growth can be sustained?
A: I think that private equity is a very exciting form of capital. I think that the governance burden, the returns burden, and the spotlight on public companies have led to a bit of a brain drain of talent to private equity. I also think the returns have been there. So, I think private equity will continue to flourish. As an investment class, it’s very exciting, and I think it will continue to grow. It is something that the UK is very good at.

Q: Do you think that there are enough women in boardrooms? If not, what needs to be done to fix this?
A: I think that the Davies Review had great success. I think we have made fantastic progress, from less than 10% to now nearly 30% female non-executive directors on public company boards. I think the challenge now is to get more women into executive roles in companies, and I think that genuinely, we’re on a journey, we need to carry on putting pressure on everybody, but yes, we’ve made great progress. At the end of the day, 51% of the UK’s working population is female, and boards and executive committees should represent that.

Q: Which books would you recommend for someone my age?
A: I think that it’s really interesting to read books about people who have succeeded in different walks of life. So, I think autobiographies and biographies of remarkable people are always fascinating. I think that it’s also really good to read the great pieces of fiction, like A Fine Balance by Rohinton Mistry, which takes you through the Indian lifestyle and the Indian family. I think books about people and books about different parts of the world help your mind to grow because they provide different types of experience. So, I think any book that takes you out of your comfort zone at your age has got to be good for you.

Q: What life lessons have you learnt over the course of your distinguished career?
A: The harder you work, the luckier you get. Treat everybody the same. And life is not just about intelligence, it’s also about emotional intelligence: you have to be bright, but you also have to have intuition. So, never stop learning, and have a voracious appetite for technology, because we are living in a period of extraordinary technological change, which is impacting politics and business. You’re living through a very exciting period.

Q: What did you learn in your teenage years which you think has influenced your success?
A: I think that you have to have a zest for life. I think that you have to enjoy yourself. I think you have to have fun. I think you should respect your family and your friends. Never bully anybody. So I think that if you treat others well, they will treat you well. I genuinely do believe that you have to have a true zest and voracious appetite for life, and if you use that as a mantra, you will have a very enjoyable time. Don’t surround yourself with negative people or negativity.

Q: Is there that anything you wish you had done which you didn’t do when you were my age?
A: Concentrated a bit more in my French lessons.

Q: Who is the most interesting person you’ve met and why?
A: My wife and I were lucky enough to have afternoon tea with Nelson Mandela on his 88th birthday. Without a shadow of a doubt, it was the most extraordinary cup of tea and hour and twenty minutes of our married life. Apart from Nelson Mandela, probably my wife.

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