"‘A passing of the guard’? Governance and strategy in the ‘Big Four’ British clearing banks, 1973-2005"

Since the mid-1970s, British banking has undergone significant industry-wide changes, including: enhanced regulation; the activities banks could undertake; ownership of major firms; and strategies they followed (Michie 2001; Collins 1988; Howcroft 2005). To examine these topics, we compiled a unique database of the directors of the Big Four banks (Barclays, Lloyds, NatWest, and Midland, later HSBC) at five-year intervals. This database contains information on their roles within the bank, their educational and professional backgrounds, as well as tangential information such as familial links to the founders of the banks and geographical origins. Following Bosboom et. al. (2019), we compare these data with secondary sources, including official histories of the banks, to track the educational background of directors and their industry experience over time to assess the development and effectiveness of ‘board capital.’ We particularly examine knowledge brought by directors as a key resource of the firm and plot this analysis against key events for the industry, such as the Big Bang deregulation of the London Stock Exchange in 1986, and legislation aiming to improve corporate governance in British business, such as the 1992 Cadbury Report. Preliminary findings suggest that benefits from forming smaller bank boards are more assumed than demonstrated. While the boards of the Big Four shrunk in the 1990s, this appears to be at the expense of non-executive directors who were not career bankers. Instead, evidence shows that the remaining directors came from similar educational or industrial backgrounds to earlier boards, with some of the banks having retained the same directors from 1980 to at least 1995. The full paper will interrogate the concept of ‘board capital’ within the banking industry, as well as exploring how the changes in board membership influenced the banks’ attempts to deal with an increasingly competitive marketplace.