More than able to ride out HBOS furore

FOR Archie Kane, the chief executive of Scottish Widows, the takeover of HBOS by Lloyds TSB is making him feel like Yogi Berra, the American baseballer who said: "It's a little like déjà vu all over again."

Although the potential demise of Scotland's iconic bank is causing consternation among politicians, shareholders and Scottish grandees, to Kane it looks like another big merger. It was Kane who, as strategy and corporate development director at TSB, negotiated its takeover by Lloyds in 1995.

That marriage, too, caused some murmurings in Scotland, although the Trustee Savings Bank founded by the Reverend Henry Duncan of Dumfriesshire in 1810 had long since grown into a large UK savings bank with a listing on the London Stock Exchange, a subsequent delisting and then a carve-up.

Then, Kane was responsible for managing the integration under the Lloyds chairman and chief executive, Sir Brian Pitman. He grasped with both hands the tough job of sorting out the back office operations and the IT systems – he still recalls the trouble that loomed when the Y2K bug threatened to bring passenger airliners falling down from the skies and wipe bank out to zero.

It was a relief to Kane, and the rest of the world, that the Y2K doom-mongers were ludicrously wrong. The question is will Kane, along with his fellow Lloyds TSB board members, chairman Sir Victor Blank and chief executive Eric Daniels, prove the naysayers wrong again?

There is a sternness in Kane's dismissal of the deal's critics. If shareholders think rules were breached when HBOS chief executive Andy Hornby laid the deal on Lloyds' door at Gresham Street, then that's too bad for them. If Alex Neil's "Save the Bank" consortium thinks it could make a go of a single Bank of Scotland minnow, then its grasp of the realities of the world's banking system as it now stands is woefully lacking.

Although he is up for the strenuous effort the merger will require, Kane didn't look well pleased to be facing the press when he met First Minister Alex Salmond earlier this week.

It looked like he would rather have made a clear escape while Salmond handled questions at a scheduled press conference a little later in the afternoon.

By then Kane would have been well out of the way, maybe even with time to have a drink at the airport before flying to London for his meeting with the Association of British Insurers (ABI), which he chairs, the following day. Instead, the reporters waited while Kane prepared the sort of bland statement designed to prevent its appearance on the 24-hour rolling news.

His statement merely confirmed that he had listened to what Scottish politicians had to say, but it was still too early to tell what would happen. He skated over the questions weighing heavily on most Scots, which were about how many jobs would likely be lost, and was the deal indeed able to go ahead.

Later Salmond said Kane had discussed a number of "confidential issues". The First Minister also said Kane had been confident the deal would go ahead, regardless of mounting challenges to the deal by shareholders disgruntled with the terms offered. Salmond called the £12 billion offer for HBOS the "deal of the century", but also said it was likely to be the only offer on the table.

Both men said the meeting was a positive one – they would have been indiscreet to have admitted anything less. For his part, Kane rates Salmond's grasp of the business issues.

On his side, Salmond poured scorn on sniping that the Lloyds board had fobbed him off by sending Kane. Instead, Salmond said that, as head of Scottish Widows, the insurance group within the larger Lloyds organisation, Kane was an ideal figure to represent Scotland's side.

"He is not only just a group executive director, but somebody who in terms of his leadership of Scottish Widows can demonstrate how it is possible to run a head office in Scotland highly successfully and profitably as part of a wider financial group," Salmond said.

Although Kane is head of one of the UK's best-known life and pensions companies, his background is predominantly as a banker. He spent a good chunk of his 22 years with the group in senior management at TSB, and before that he spent some time in telecoms. Where most heads of insurance companies – Aegon's Otto Thoresen, Standard Life's Sandy Crombie, and Scottish Widows's own chairman Lord Leitch, for example – come from actuarial backgrounds, Kane is a chartered accountant.

He was born in Hamilton, the only child of what he describes as "very modest, honest to goodness folk" who moved into their own small house from the council house where Kane, an only child, was born. Although he is no flamboyant character with a dazzling media profile, his ties and his links to the corridors of power run deep and long.

He is close to Alistair Darling, whom he met with yesterday in London having been hand picked to join the Chancellor's Financial Services Global Competitiveness Group. Being chair of the influential industry body, the ABI, means – ironically, perhaps, for some who think the Lloyds-HBOS deal overhasty – he also sits on the Takeover Panel.

Kane clearly impresses his boss Daniels. The latter would is likely to have been impressed by the half-year results Kane delivered in July, where Widows turned a tidy 15 per cent boost in profits to £298 million. But Kane's skills he spotted early.

One of the first things the American did when he seized the top job at Lloyds in 2003 was to oust Mike Ross and put Kane in his place. It was an embarrassment to Ross, a well-kent figure in the Scottish insurance world, who had made it public that he intended to stay at Scottish Widows for at least another three years. Daniels was unsympathetic.

But nor does Kane give the impression that he suffers foolishness either. An affable man who plays golf – when he can – and a bit of tennis, it may not be just the difficult times we are in that adds a ponderousness to his otherwise distinguished features. Even his reading is serious – currently he is reading a book on the genocide perpetrated by the Khmer Rouge, a choice inspired by his recent family holiday in Cambodia.

Although he is right where he wants to be in his career, he would like to see a more benign environment for his work bringing two of the UK's most important banks together. "I guess I would rather be in a world that is slightly less worrisome from a global financial point of view," he says.

"I would rather things settled down a little bit because that is not something any of us – any government or any organisation – can control. It would be helpful for everybody if we could get through some of the troubles and hopefully get, I wouldn't say a stable environment, but a little less volatility in the large global markets."

BACKGROUND

ARCHIBALD Gerard Kane, 56, was born in Hamilton. Head of Scottish Widows he is is also the longest-serving board member of Lloyds TSB. He splits his time between Scotland and London, and is married with two children.

Kane trained as a chartered accountant with Mann Judd, before working for PriceWaterhouse, which took him to work in Brussels.

While in the Belgian capital, he joined General Telephone & Electronics – GTE.

• 1986: Kane joins Lloyds TSB after years as finance director of BT Yellow Pages sales division, when he completed an MBA.

• 1989: Appointed to the position of director of financial control for the retail banking division of Lloyds TSB.

• 1997: Made director of group IT and operations at Lloyds TSB.

• 2000: Appointed to the main board of Lloyds TSB Group as group executive director, IT & operations for Lloyds TSB.

• 2003: Kane named as group executive director of insurance and investments at Lloyds TSB Group. On the same day he was also appointed chief executive of Scottish Widows.

• 2007: Becomes chairman of the ABI and a member of the Takeover Panel and HM Treasury's retail financial services group.