We didn’t start the fire

Tomorrow's Business

A simple rule of thumb: if you’re blaming the media for the state of your business, you’ve lost the argument.

There’s no doubt bad press can make a difficult situation worse – lenders don’t want to lend, suppliers want paying up front, customers flock to rivals.

But it’s highly unlikely to send an otherwise healthy business bust.

Today H20 Asset Management blamed “deeply unfair” media interest in its bond portfolio for a “rampage”. H20 has seen 8 billion euros depart its funds as investors became nervous.

H20 likened the events to a run on a bank, stating: “Questioning the liquidity of our funds is equivalent to ascertaining the incapability of a bank to refund its deposits, with the devastating consequences which economic history has already taught us.”

This would make sense if it had become clear that the banks which went bust during the last financial crisis were merely illiquid, rather than insolvent. They weren’t. They went bust because they were bust.

So this sort of stuff is badly advised, I fear. It has the opposite effect to the one intended. From memory, this “run on a bank” excuse has been used at least twice in relatively recent years by very big companies in serious trouble, both of whom insisted they would be just fine if the press left them alone.

They were Enron and Royal Bank of Scotland.

Contact the Tomorrow's Business team news@tomorrowsbusiness.co