City: Wanted: strong leaders in the City

ON THURSDAY evening, the directors of the London Stock Exchange met for a most unusual board meeting. They discussed and then took a vote on the proposition that Peter Rawlins, the exchange's controversial chief executive, should not resign. They decided he should not. And I understand that Mr Rawlins himself has no intention of stepping down.

The Stock Exchange's decision looks a suspiciously half-hearted attempt to support Mr Rawlins. A reformer who has courted conflict and failed to make friends, he has many enemies who are stepping up their efforts to oust him.

This is unfortunate for the exchange, which is still in the process of radical change and needs clear leadership. Yet it is not unusual. The City is in an unprecedented state of disarray, with a remarkable number of its key institutions virtually leaderless.

Take Lloyd's of London. David Coleridge, the incumbent chairman, has had enough of the unpleasantness of dealing with irate names who have lost money. He is withdrawing to enjoy the prosperity of his family business, but until he leaves next year he is a lame-duck chairman.

Battle lines have been drawn within Lloyd's in the fight for a successor, but it will be a while before they choose a new leader. In the meantime, given the absence of leadership, it is hard to see how the market is going to handle the tricky business of transforming itself into a modern institution capable of dealing with its own problems effectively.

In the Square Mile's fragmented regulation industry, things aren't much better. At the Securities and Investments Board, the chief City watchdog, Andrew Large is struggling to understand businesses he knows little about. His career has mainly been in the international bond market. Since taking over the SIB chairmanship two months ago, however, his main task has been to sort out the mess created by the Maxwell affair. This involves expertise in areas of investment such as pensions, a world away from Eurobonds and one in which Mr Large inevitably looks badly qualified.

The Maxwell affair has hit Imro, the fund management regulator, even harder. It was found sadly wanting in its dealings with Maxwell, and John Morgan, its chief executive, has stepped down. Charles Nunneley, the chairman, is temporarily in charge but there is no-one to sort the place out.

At the Serious Fraud Office, George Staple recently took on an unenviable job. He has the dubious privilege of replacing Barbara Mills, now the Director of Public Prosecutions, under whom the department suffered a series of reversals. Already heavily criticised and demoralised, the SFO received another knee in the groin 10 days ago, with the overturning of the Blue Arrow verdicts. With his department in disarray, new boy Mr Staple is not a force to be reckoned with in the City.

Which leaves Robin Leigh-Pemberton, Governor of the Bank of England, as the City's only elder statesman. Certainly the Bank is the Square Mile's pre-eminent institution. But even its reputation has taken a terrible beating over the BCCI affair, and Mr Leigh- Pemberton has only another year to run in the job. There is, in short, a kind of power vacuum developing at the top of the City's institutions just when the Square Mile can ill afford it. All these organisations are undergoing rapid change. Some, like the regulators, are still so new they have hardly forged an identity for themselves. Yet they seem to have failed to attract the kind of people who can handle change effectively.

The City has always jealously guarded its independence by insisting on its own 'practitioner-based' institutions. One problem is that the really good practitioners never want to run them. Perhaps the solution is to find a way of drafting in outsiders, perhaps from industry, to help run the City. Or perhaps, dare one say it, it is time to bring in some civil servants and see what they can do.