SO the Bank of England, the City watchdog and a raft of supposedly
high-quality executives couldn’t save Northern Rock, but Sir Richard Branson
reckons he can – or rather he thinks Jayne-Anne Gadhia can.
Since the plan is viewed as either a huge challenge or a publicity stunt,
depending on whom you talk to, I am warned that the Virgin Money boss is
ambitious or extremely naive.
But even my scepticism is checked on meeting her – she certainly doesn’t look
the malleable type. The 6ft 2in figure, decked in a loyally Virgin-red
jacket, is towering over a television screen watching the football,
oblivious to advisers running around her.
“Don’t worry about all this,” she says with a brisk Midlands accent, waving
her hand and settling down amid the commotion. “We’re girls, we can
multi-task.”
She is about to have a two-day break in Paris with her husband and
five-year-old daughter to celebrate her 46th birthday, but Gadhia says she
is relishing the mayhem of the past two weeks.
“I’ve been working 20 hours a day. Usually I hate not having sleep but somehow
this is fine. I’m actually enjoying it.”
There’s a lot to do. Apart from the Treasury select committee’s witch hunt for
the culprit behind the first run on a British bank for 140 years, Gadhia is
currently the focus of hope for Northern Rock’s beleaguered investors,
customers and employees.
Although she faces tough competition from heavyweight rival bidders JC Flowers
and Cerberus, the Branson bid is the one that stakeholders – and the
government – want to believe in since Branson claims to be able to save the
bank, jobs and give something back to investors.
It is thought the American buyout firms would break up the company and pay
nothing for the equity – a grim prospect, but frankly seen as increasingly
realistic.
So is the Branson plan really possible? Gadhia’s blue eyes are steely:
“Richard, Virgin and I are deadly serious about this and believe we can, and
will, do it.”
Well, it’s easy to say. Despite the grand-standing, the Treasury select
committee reckons nobody knows what went wrong at Northern Rock. Does she?
“The first problem was that 75% of the bank’s balance sheet relied on external
funding. The fact that this dried up could be seen as unlucky. But what
can’t be down to luck but a point of management is the rapid acquisitions
that Northern Rock made in the first half of the year. During that time the
bank took vast market share which then got into trouble with the credit
crunch. Growth at all costs will go wrong.”
Okay. What does she plan to do about it? “The problems are that the brand is
dead, the management team has lost credibility and the problem is of
solvency and funding,” says Gadhia. “We believe the Virgin brand is exactly
what’s needed to reassure the public. We have a top management to put in,
including hopefully getting a top-level nonexecutive chairman. And we have
some serious investors, with more that we’re talking to.”
They need to raise enough to cover Northern Rock’s £16 billion loan from the
Bank of England, plus another £10 billion or so to keep funding levels up.
On top of trying to persuade more investors to join them, Gadhia also has to
keep the confirmed investors happy. So far, AIG, the American insurer,
Toscafund, a hedge fund, and Wilbur Ross, the American billionaire, have
agreed to take equity stakes.
Born in Sawbridge, West Midlands, Gadhia was the only child of her father, who
ran an electrical business, and her mother, who kept the house. Despite her
Midlands accent, Gadhia grew up in Norfolk, where her father’s work took the
family when she was still young.
She was sent as part of the first intake of girls to an all-boys’ school in
Bury St Edmunds.
“There were only 17 of us girls, which was was quite tough, but I think it
probably gave me my instinct to survive in a man’s world,” she says.
“I was definitely more brainy than sporty – I love sport, but watching it
rather than anything else.”
After A-levels, Gadhia went to Royal Holloway College in London to read
history.
“On the first day there I met my husband – and we’ve been together ever
since,” she says. “He did physics and is a tax accountant, but he gave up
work when our daughter was born five years ago so that I could get on with
things. He now does some property development but is flexible so he can look
after Amy.”
After university, Gadhia went back home to Norfolk where she spent three years
at Ernst & Young training to be a chartered accountant. On qualification
she jumped ship to Norwich Union to be an accountant in the unit-trust
department.
Gadhia said her first break sprang from a crisis – the stock-market collapse
of 1987.
“After Black Monday everything changed,” she says. “My boss came in and said
he wanted me to be marketing director for the whole of Norwich Union’s
unit-trust business.
“I was 28 and had never done a sales job before, but my boss said success
would depend on building relationships. So I took it on and within the next
12 months sales figures increased by 300%.”
Gadhia now had the attention of senior management, who then put her in charge
of Norwich Union’s network of sales agents.
It was on her watch that in March 1994 Norwich Union was hit with a large
mis-sell-ing scandal that rocked the whole company.
“In a way, it was not unlike the Northern Rock situation now, with huge media
attention and questions being asked in parliament,” says Gadhia.
“But the real problem was that we had no real means of proving that the
salesforce hadn’t done anything wrong because very little of what they did
was written down.
“The chief executive of Norwich Union told me he wanted me to sort it out –
and then helpfully told the media that the salesforce would be back on the
road by April 25. I had a matter of weeks.
“I went to see the regulators, who were extremely hostile to start with. I
just explained that we had to get the salesforce back on the road and I
desperately needed their help. After that they softened and agreed that we
needed to work together to resolve the problems.”
The task was huge. More than 1,000 sales agents had to be put through both
internal and external exams that were properly benchmarked. Then they had to
demonstrate they could meet sales standards.
“I told my boss that it would be extremely hard to get it done in the time
frame. He told me that if I didn’t get 100 sales agents back on the street
by April he would see to it that I lost my job. It was this unreasonableness
that spurred me on. By the deadline I had 346 people back on the road.”
Shortly after the crisis Gadhia was reading Hello magazine on a train when she
saw a piece about Branson.
“It sounds corny, but I wondered what it would be like to work for him. A
friend said he knew the man who was setting up Virgin’s financial-services
arm.”
After being introduced, Gadhia and Gow-ery started plotting what would become
Virgin Direct, the joint venture between Virgin and Norwich Union.
“We were working on the plans at Richard’s house in Holland Park when I first
met him. We were upstairs, where he had a billiard table that turned into a
board table. Richard came up the stairs saying he had just launched Virgin
Cola.
“Because of exclusive deals with Tesco and Iceland, he already had 6% of the
market. I remember thinking it would be great to work with someone so
enthusiastic.
“I’m driven by wanting to make a difference. If I’m going to spend time away
from my daughter then it’s got to be worthwhile. Richard offers the chance
to do this.”
Gadhia was operations director of Virgin Direct, whose One Account flexible
mortgages were an immediate hit. Royal Bank of Scotland bought the venture
in 2001. Gadhia also joined RBS, rising to become head of consumer finance
in charge of a mortgage book worth £67 billion. She left late last year and
rejoined Virgin Money in February.
“I rejoined with a view to introducing mortgages through Virgin Money,” she
says.
“It’s not that great a surprise that we’re going for Northern Rock – a
ready-made business we wanted. We admired it for its customer front-end, its
people and its innovative products. It’s reassuringly familiar.
“We want to rebalance Northern Rock into a building society, diversify the
products and put the Virgin brand on top. We are confident this can work.”
JAYNE-ANNE GADHIA’S
WORKING DAY
THE Virgin Money boss usually gets up at 6.15. Jayne-Anne Gadhia has a study
with a PC, television set and shower area, so she starts the day by
showering, checking e-mails and watching the news all at once. She wakes her
daughter at 7am and, if she can, takes her to school at 8am.
If life is normal, Gadhia has a team meeting every morning at 9.30 – everyone
dials in if they can’t make it to the office. She tends to spend two days a
week in London, two in Edinburgh and one in Norwich so she spends a lot of
time travelling to and from Edinburgh airport.
If she is in Edinburgh, she tries to get home for tea time at 7pm and catch up
on the news of the day. Then she watches some television with her daughter.
Later Gadhia finishes all e-mails and paperwork and tries to be in bed by
10pm. She always sleeps well.
VITAL STATISTICS
Born:October 16, 1961
Marital status:married with one daughter
School:Culford school, Bury St Edmunds
University:Royal Holloway college, London
First job:trainee chartered accountant
Home:Edinburgh
Car:BMW X5
Favourite book:Possession, by AS Byatt
Favourite film:Robin Hood: Prince of Thieves
Favourite gadget:iPod station
Favourite website:BBC News
Last holiday:south of France
Interests:music, crime novels, running
DOWNTIME
JAYNE-ANNE GADHIA says she doesn’t have much free time at the moment but that
she draws great support from her family and friends.
She always intends to run in the morning but usually just manages to watch
sport instead. Otherwise she enjoys crime novels, music and teaching her
daugher to read.
She says: “Its important to me to work hard so that every night I can go to
bed knowing I have done the best I can.”
