Jim Armitage: TP Icap’s Phizackerley goes out with a bang in broker’s shock top clear-out

When you’re running a business with a strategy of cutting costs and slashing pay, best not rock up to work in a chauffeur-driven Range Rover chomping on cigars.

You can get away with it at a high-falutin’ investment bank, but not at a down-to-earth broker like TP Icap.

That’s how the folks at the top of  TP Icap are selling the demise of former chief executive John Phizackerley, a former Lehman Brothers and Nomura bigwig.

I say “demise”: drive-by shooting is a more accurate phrase.

For this was a very unusual ousting. “Phiz” presented his forecasts and five-year plan to the board little more than a fortnight ago and had them approved, only to be called in by the chairman to be sacked yesterday.

There are two versions of the story. From the TP Icap view, the winner-takes-all investment banker was big on the deal, less so on the nitty-gritty integration.

From the Phizackerley perspective, his achievement of merging his Tullett business with Icap’s voice broking arm was a major win, a game-changing consolidation of the old-fashioned end of the broking world.

Electronic broking has been eating into the business of arranging trades over the phone, but the TP Icap deal held out the promise that if you’re big enough, you can still survive if you focus on the complex trades algorithms can’t arrange.

Whichever side you take, you have to admit Phiz deserves credit for the merger — it was complex and took well over a year to get over the line.

But to meet its synergy targets required a hands-on grip of the detail which some say he didn’t have. His friends claim the cost-saving plan was way too aggressive from the start. The merger was originally sold to investors as having £60 million of potential savings, but those were upgraded to an unachievable £100 million. The upgrade appears to have been ordered by the chairman, but as chief executive, Phizackerley can’t duck responsibility when implementation falls so far short.

While he was trying to cut broker pay and squeeze out costs (while grumbling about a reduction in his own LTIP plan) the business clearly needed investment as well.

Having run a separate review of Phiz’s numbers, the board led by chairman Rupert Robson — not the easiest man to deal with — decided he was not the man for the job.

Now they’ve done a kitchen sink job on the business. New chief executive, new finance director and — when Robson leaves later this year — new chairman. Most importantly, new, more realistic targets. Some will carp that the fresh team aren’t so new. Both the chief executive Nicolas Breteau and finance director Robin Stewart have been there for years. But they should be given a chance to prove themselves.

TP Icap is going through the reset it probably should have had a year ago. And this time, under a chief executive who claims to take the Tube.

Source: Evening Standard

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