History lesson: Ex-Midland Bank FD, Michael Julien

The form might have changed, but the substance of the mistakes behind the current banking crisis holds nothing new: poor lending decisions, slack management, excessive optimism and too many unfettered egos. We have been here many times before.

Michael Julien knows this better than most. Now retired and splitting his time between Surrey and western France, Julien made several waves in the City throughout his senior management career. A big one was his appointment to the board of Midland Bank in 1983: the first finance director at a UK clearing bank.

Midland Bank doesn’t exist today, having been acquired in an orderly fashion by HSBC in 1992, but in 1985, when we interviewed him as part of an article on why banks needed finance directors, it was secretly confronting a more violent end. “We came very close to failing,” says Julien.

Midland had been the nation’s biggest clearing bank, used by hundreds of foreign banks in London. You can see its massive bronze nameplate, still exuding echoes of past power and influence over the doors of its former headquarters close to the Bank of England.

Getting on board
Julien had been appointed at the behest of Midland Bank’s chairman, the Scots chartered accountant Sir Donald Barron. Julien was well known to three of the Midland Bank directors who also sat on the board of his former employer, cable-maker BICC: a “bit of a stitch-up” Julien recalls with a wry smile.

At the time of his joining, Midland Bank had no reason to think it was in serious trouble. That was the whole point. The board had little idea of what was happening on the ground.

“I remember the first set of board papers I saw in June 1983,” says Julien. “There was no financial information at all, just a collection of loan applications.” There were no monthly accounts and the group balance sheet was only prepared twice a year at results time. In retrospect, he thinks the chairm an had a premonition of impending doom and wanted a savvy FD to put his finger on the reason why.

Soon after, Julien popped in to see the CEO, the late Geoffrey Taylor, about the annual budget review. Taylor looked blank. They had never done one of those before, although, to his credit, he embraced the new-fangled concept with enthusiasm. Julien got to work, installing budget systems, internal audit functions, a group legal division and various other departments that most of the outside world might have reasonably thought to have existed already.

Technically speaking
He found himself involved in other housekeeping issues, such as technology and communications. On one occasion, frustrated by reports from overseas colleagues that it took an awfully long time to get through on the phone, Julien went to the telephone switchboard room to find out what was going wrong.

“The chief operator nearly fell off her chair,” he recalls. “She’d never seen a main board director before.” Having recovered her composure, she explained the reason for the slow connections was that the operators didn’t have an alphabetical phone directory. The 4,000 telephone extensions within the building were listed by order of seniority in the bank.

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