By Amber Murray
Here at City A.M., we’ve taken some time to reflect on some of the biggest c*ck-ups in business in the last 12 months.
Thames Water’s sustained sh*tshow
Starting strong with the UK’s largest water company and its debt-laden behemoth of operations, Thames Water is quite literally drowning in debt. Debt has risen to £14.7bn in 2023 – about the same as the GDP of Morocco.
Libdem leader Ed Davey described it as a “slow-moving car crash” a few weeks ago.
All 11 UK water companies have struggled this year, with high debt and high pollution leading to repeated collisions with UK water regulator Ofwat, but Thames Water (and its customers) has fared the worst. The company recently admitted it was unable to pay off its debts or meet three-year targets.
CAB Payments ‘green shoots’ IPO
Next up is currency trader and business-to-business transaction firm CAB Payments, which debuted on the London Stock Exchange in July as the biggest IPO of the year with a valuation of £851m. Within four months, it was worth £173m.
Its shares tanked after a profit warning and predicted growth of just 20 per cent (investors were promised 37 per cent) after issues in emerging markets like Nigeria hit operations.
London has seen some flops over the years, but it’s difficult to find another IPO that has taken such a pounding so quickly.
Home REIT’s house of cards
Home REIT had a heartwarming business goal: To supply social housing to the homeless.
Unfortunately, it tanked pretty hard after it turned out that its property portfolio was largely made up of either empty or worthless houses. As a result, it turns out the properties Home REIT acquired were worth less than half of the price the company paid for them.
Investors still aren’t sure whether they’ll be getting their money back, and just last week a law firm representing some 250 Home REIT shareholders moved to sue the company.
Bernard Looney’s missed payday
Cheif of BP for three years and employee for 33, Bernard Looney stepped down this year after an anonymous tip-off to the board. The tip-off alleged Looney had failed to properly disclose his personal relationships with colleagues to the board.
This was a pretty expensive gaffe: Looney ended up missing out on £32m after the board decided he was guilty of “serious misconduct” – mainly for failing to disclose relevant information to the board (the board considered themselves “misled”).
It’s ok, though – he still got paid £10m in 2022, more than 286 times the average UK wage.
SVB UK’s ‘ringfenced’ balance sheet
Ah, SVB. The infamous “start-up bank for start-ups” was sold to HSBC for the hefty sum of £1 in March, under pressure from the Bank of England.
After a huge bank run – clients attempted to remove 30 per cent of capital in the UK branch – SVB simply… ran out of cash. Lack of investor confidence and poor management seem to have caused the bank run and subsequent buyout, and it’s likely SVB’s troubles will lead to more stringent banking regulations in both the UK and the US.
Metrobank’s recapitalisation nightmare
Metrobank became the UK’s poster child for banking issues in October 2023 after investors started to raise concerns about the state of its finances.
Luckily, a last-minute refinancing deal worth more than £1bn saved the bank from total collapse, but it’s still in rocky waters – a few weeks ago the bank admitted that its turnaround plan required more surgery than previously expected.
The bank will cut staff by 20 per cent and review the opening hours of its branches (branches which, incidentally, seem to be both the core of its business plan and the reason it ran out of money).
Natwest’s thorny debanking scandal
To bank or not to bank?
Dame Alison Rose was forced to step down as chief executive officer of Natwest earlier this year after it turned out that Natwest-owned Coutts had “debanked” Nigel Farage for his political views.
Initially rebuffing the political nature of the decision, an internal Coutts reputation risk report on Farage later came to light describing him as “pandering to racists” and being a “disingenuous grifter.”
Like Looney, Rose’s payout (of £7.6m) was scrapped after her resignation.
NATS’ air-traffic meltdown
Last but not least, NATS. Hopefully, you weren’t travelling through Gatwick on the August bank holiday this year – but if you were you were, you have City A.M.’s sincere sympathy.
Gatwick’s air traffic control system NATS suffered a technical glitch affecting more than 6,000 passengers and leading to 42 cancelled flights.
A logistical nightmare, the problem led to many passengers being diverted by coach to other London airports. To add insult to injury, passengers on the same plane were given different details about their replacement flight.
Total delays attributed to NATS reached at least 65,250 minutes.
Chief Martin Rolfe described the problem as a “one in a 15 million event” – although something similar did happen again two weeks ago on December 9, as countless flights were delayed due to a technical glitch (but no cancellations this time).
The repeated errors make this one of the biggest business c*ck-ups of 2023.
