'No apologies' Barclays boss Diamond fights for his job
- Wired World
- 29 Jun 2012 09:14 (South Africa)
Barclays boss Bob Diamond, who once said it was time for bankers to stop apologising, is fighting to save a career built on inspiring leadership and aggressive competition after regulators exposed a market rigging scandal on his watch. By Steve Slater.
Only last year, for which Diamond took home 17 million pounds, he thumbed a nose at politicians for attacking bankers' role in the financial crash of 2008-09.
"There was a period of remorse and apology for banks and I think that period needs to be over. We need our banks (to be) willing to take risks ... so we can create jobs," he told a British parliamentary committee.
However, authorities have found that Barclays traders rigged the Libor interest rate from 2005 to 2009 while Diamond headed the British bank's investment banking operations.
Now the Anglophile American, who rose to the top job at Barclays last year, is having to show a little more humility. "I am sorry that some people acted in a manner not consistent with our culture and values," he said in a statement on Wednesday announcing he would forgo his 2012 bonus.
British and U.S. regulators have fined Barclays $450 million for the scandal and Diamond's job is on the line.
"It's for the board to decide whether Bob Diamond - who has amazing leadership qualities and huge personal following in the organisation - whether he can be the person to turn the page on this or whether he is part of the problem," said Martin Taylor, who was Barclays chief executive from 1994 to 1998.
"If you go in for a policy of systematic dishonesty you have some rebuilding to do. And I'm sure the board will be very conscious of that," Taylor told BBC Radio on Thursday.
As recently as eight months ago Diamond argued that his industry could contribute to society by promoting economic growth and jobs. "To the question 'can banks be good citizens?' the answer must be 'yes'," he said in a lecture.
Diamond admitted that many people would not believe him, but said bankers had changed their ways since the crash and he had made citizenship one of his management team's priorities.
"Would I have chosen citizenship as a key priority five years ago? I doubt it. Events of the past few years have caused me to change my mind," he said.
Five years before he gave this lecture was precisely when Barclays traders were rigging the London interbank offered rate, which underpin about $360 trillion of loans and financial contracts.
Robert E. Diamond, 60, is one of the world's highest profile bankers and no stranger to controversy after years of fat bonuses paid for what his critics call "casino banking".
Diamond and other bosses at the 322-year-old Barclays need to answer "serious questions", British Prime Minister David Cameron said. Barclays shares have crashed 15 percent.
Four months ago Barclays was also accused of running "highly abusive" tax avoidance schemes, and all British banks have been hit by a multi-billion-pound insurance mis-selling controversy.
Scrutiny in the coming days is likely to focus on how much senior management knew, and how far company culture was to blame. Diamond instilled a remarkable culture at Barclays Capital, the bank's investment banking arm.
"Bob runs an extraordinarily competitive and aggressive ship, and that is one reason why Barclays Capital has been so successful in the first decade of the century," said former CEO Taylor, who was sat on a commission that proposed far-reaching reforms for all UK banks this year.
"When people are pushed to go to the limit - you know what traders are like - they sometimes go beyond it. They don't need to have an instruction from headquarters to go beyond it, they think it is what the bank might expect perhaps."
The Concord, Massachusetts-born son of two teachers joined the bank in 1996, spending most of that time building the investment bank into a debt market powerhouse, credited with reviving it from the ashes of Barclays de Zoete Wedd (BZW).
He became an investment banker almost by accident, only entering banking after two years as a lecturer in business at the University of Connecticut. After being attracted to bond trading he joined Morgan Stanley, spending 13 years there and then four at Credit Suisse First Boston, which he left to join Barclays, reportedly after a row over pay.
Diamond missed out on the CEO's job at Barclays in 2003 and was linked with other top roles, but stayed with the London bank and in 2008 struck his boldest deal - buying the U.S. arm of stricken Lehman Brothers. That gave him an equities and advisory ability to take on Wall Street powers such as Goldman Sachs.
His bonus has long been the lightning rod for British public and political anger over bankers' excessive pay, and he was branded the "unacceptable face" of banking in 2010 by Peter Mandelson, a minister in the Labour government of the time.
STEPPING IN FRONT OF A TRAIN
Diamond is one of Europe's best paid bankers, and took home about 17 million pounds in salary, bonus and share awards for last year, prompting a backlash from investors that forced him to tweak his long-term pay award.
"No politician has ever lost a vote by bashing a bank, and these guys (at Barclays) have stepped in front of a train," said Alex Potter, analyst at Berenberg Bank.
"Diamond was already on borrowed time after the pay revolt and the tax avoidance schemes. This is starting to look like his position will be very difficult to maintain," Potter said.
Married with three children, he remains an Anglophile. After sealing the Lehman deal, he is reported to have played "God Save the Queen" over the tannoy of the bank's trading floor.
The avid sports fan and former football linebacker is a big fan of London soccer team Chelsea, to add to his beloved Boston Red Sox, Celtics and New England Patriot teams.
He often draws parallels between sports and business, and says he runs a meritocracy and rewards success, touring the dealing room and talking to the players. DM
Photo: Bob Diamond (Reuters)