Profile: Robin Budenberg, man in the middle of the bank bonuses row

STARTING a new job is never easy but for Robin Budenberg, the former investment banker who today takes charge of UKFI, the phrase "baptism of fire" is about to take on a whole new meaning.

On a purely prosaic level, the new chief executive of the agency that controls the taxpayer's stake in nationalised banks, will have to cope with a move to new offices on Cockspur Street, just off Trafalgar Square in London.

Since it was set up in the immediate aftermath of the banking crisis last year, UKFI has been a refugee inside the walls of the Treasury, where its small but highly skilled staff tried its best to make a home out of a hastily-found, inadequate room.

However, with a new chief executive will come new premises, which are far more suited to an organisation charged with such a colossal task.

If the first few days in the new office yield the IT problems that always go hand in hand with a move, they will be the very least of Budenberg's worries.

The notoriously discreet but high-flying investment banker could not have suffered a worse run-up to his big day.

First, in an act of extraordinary brinkmanship, the RBS board, including its chief executive Stephen Hester, threatened last Wednesday night to stage a mass walk-out if the Treasury and UKFI castrated bonus payments, which they believe are crucial to hold on to talented staff.

Although a day later Prime Minister Gordon Brown tried to smooth over the crisis by reassuring that RBS would not be a victim of unfair treatment, it was not long before a bonus row was brewing at another bank in which the taxpayer is heavily invested: Lloyds Banking Group, where it emerged that 200 executives are in line for a one-off bonus worth 80 per cent of their salaries. The rewards, which will amount to 2.4 million for Lloyds' top dogs, including its chief executive Eric Daniels, are in return for the integration of Lloyds with HBOS after the takeover last year. As if an explosion in the bonus row was not enough, a National Audit Office report revealed that taxpayers are propping up Britain's banks to the tune of 850 billion.

Although ultimately the buck on bonuses stops with the government, it will be Budenberg's job to weave a safe path through the thorny issue of rewards. Analysts say this will be easier said than done as the remarkable act of brinkmanship between the RBS board and the Treasury proves.

During his 25 years as a senior investment banker at UBS, Budenberg has built a reputation as a pragmatic diplomat who, in the later years of his career, was the chief liaison between the Swiss financial giant and the UK government.

In his new role, he will have to summon all his diplomatic skills as the next few months promise more fireworks between the banks' boards and the government.

As Nic Clarke, analyst at Charles Stanley stockbrokers, says: "He brings a lot of experience which he is definitely going to need. It's a very difficult job. He will basically be the meat in the sandwich between the companies and the Treasury."

Budenberg does, however, have previous when it comes to negotiations between the government and the top brass at banks such as RBS.

He was a member of the cavalry summoned at short notice during the heat of the banking meltdown in early October last year to swiftly stitch together a battle plan to save the UK banking system from imminent collapse.

On 7 October 2008, Budenberg, Chancellor Alistair Darling, Sir John Gieve, former deputy governor of the Bank of England, Hector Sants, former chief executive of the Financial Services Authority, and Naguib Kheraj, the chief executive of JPMorgan Cazenove, hammered out the details of the 500bn rescue until the early hours.

The "Balti bail-out" – so-called because the men were nourished with 250-worth of curry from the Chancellor's favourite Indian on London's Kennington Road – was subsequently simulated by governments throughout the world, earning its architects international respect.

Politically delicate deals appear to be Budenberg's speciality.

In 2002 he advised the government on the Railtrack debacle and was hired again by Whitehall to help with the disposal of the government's stake in nuclear power giant British Energy, which was eventually sold to EDF last year.

According to those close to him, Budenberg is an investment banker of the old school. Judicious and diligent, he works in the shadows, avoiding publicity and putting in all the hours to get the job done. Former colleagues say he rarely surfaces for air other than to return to his wife and children who are based near Colchester. His only other known interest outside of deal-making is golf and he makes time for an annual golfing trip to Ireland with friends from Exeter University.

Budenberg, 50, was schooled at Rugby before doing a law degree at Exeter. On graduation, he opted for accountancy instead of the law and qualified as a chartered accountant from what was in those days still called PriceWaterhouse.

At UKFI, Budenberg will earn 155,000 a year, a substantial pay-cut for an investment banker. But he shrewdly negotiated the flexibility to take on one or two non-executive roles elsewhere.

Crucially, he has agreed not to take a bonus, saving the government from political embarrassment.

The City suggests that Budenberg will be a "safe pair of hands" at the helm of UKFI but even for a negotiator of his calibre, the next few months are going to be testing. As Clarke says: "As we head into a general election, his task (of tackling bonuses] is going to be increasingly difficult."


ROBIN Budenberg, 50, is the new chief executive of UKFI, replacing John Kingman who announced his unexpected resignation in July.

Budenberg was chosen for the 155,000-a-year role ahead of internal candidate John Crompton, head of market investments at UKFI .

Budenberg has spent most of his career at Swiss bank UBS, where he worked on deals including the sale of the government's stake in British Energy and of BAA to Spain's Grupo Ferrovial.

Raised in Cheshire and educated at Rugby School and Exeter University, Budenberg lives near Colchester, Essex, with his wife and four children.

His first challenges at UKFI will include negotiating bonuses at Royal Bank of Scotland and selling off the "good bank" element of Northern Rock.