Business

What does it mean that the three mega-bankers have quit?

BBC business editor Robert Peston on Eric Daniels' Lloyds exit

There was a time, not so very long ago, when it was unclear whether Eric Daniels would have the luxury of being able to determine the moment of his exit from Lloyds.

The 2008 takeover of loss-making HBOS cost Lloyds's shareholders so much in the short term - both in respect of a tumbling share price and the arrival of HM Treasury as a 43% (now 41%) shareholder - that it was taken for granted in the City that he would be pushed before he jumped.

But the dogged Mr Daniels refused to be moved. And latterly he has resisted an increase in the state's shareholding while overseeing a return to profit by the enlarged bank.

His reward is that Lloyds's directors have allowed him to tell them - as he did a week ago - that he wants to quit. And today the bank's board accepted his decision to be somewhere else a year from now, by which time he'll have been chief executive for a respectable eight years.

Daniels is the third bank boss this month to stand down: John Varley is quitting as chief executive of Barclays; and Stephen Green is departing as executive chairman of HSBC.

Why has there been this flurry of bankers heading for the door?

Well, it tells you that banks are past the moment of acutest crisis and face a new challenge - which is how to persuade the government and its banking commission (whose detailed work plan is to be published on Friday) that they don't need to be broken up in order to make the banking system safe.

Mr Varley and Mr Daniels are staying on just long enough to make the case to the commission for mega-banks, while Mr Green will be on the ministerial committee that will ultimately decide whether banks should be dismantled, after he joins the government (as trade minister) in a few weeks.

Some would say, however, that the power of these three bankers' arguments in favour of the status quo will be lessened by their refusal to stick around to manage their respective institutions in whatever financial landscape emerges from recession and regulatory review.

Their successors - even Bob Diamond at Barclays - are less associated than them with a particular modus operandi. So arguably their departure makes it easier for ministers, in a psychological sense, to take the cleaver to the vast sprawling businesses which are their legacy.

The passing of Varley, Green and Daniels may well mark the high water mark for the idea that big is best in banking (at least for this cycle).

You can keep up with the latest from business editor Robert Peston by visiting his blog on the BBC News website.

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