Why has idiosyncratic Idzik exited? In early May, it seeped out that Paul Idzik, Barclays’ chief operating officer, had decided to leave the UK bank. And for a while, all anyone wanted to discuss was the Idzik exodus.
The business pages claimed Idzik was departing because of tension between Barclays’ chief executive, John Varley, and its president, Bob Diamond. I don’t believe a word of this. I believe that someone who wanted to damage Barclays placed this story with the press. And the inference of feuding and fiefdoms contributed further to investor disenchantment with Barclays, whose share price has fallen some 23% so far this year.
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"Paul Idzik leapt like a mountain goat over a Barclays security barrier to prove that there was no security" |
Paul Idzik, whom one source describes as “a titan of management process”, joined Barclays Capital as chief operating officer in 1999 from Booz Allen. He flourished: his strong intellect and work ethos impressed Diamond, who recommended him to Varley for a senior role at group headquarters. Idzik obviously managed upwards well. His ability to manage downwards is more questionable. A number of stories circulate about his unconventional behaviour. Such stories presumably were leaked by enemies rather than friends. Idzik is said to have leapt like a mountain goat over a Barclays’ security barrier to prove that there was no security. Nothing wrong with that I suppose. I only wish my legs were longer so I could imitate his feat. Think how many calories one could burn entering and exiting the office. However, grumbling at employees in possession of items with alien logos (as Idzik is said to have done) seems sanctimonious. And can it be true that he once berated a slovenly attired person in the lift for appearing unprofessional in the workplace only to suffer the humiliation of discovering that his victim was a client?
A mole whispers that perhaps Idzik’s power in the group was waning and that he therefore saw little prospect of further promotion. “With Diamond and Varley both still there, Paul’s prospects of reaching the top were curtailed,” Mole muttered. Another source said that Idzik had done an excellent job of streamlining the corporate structure and felt it was time to move on.
The furore surrounding the Idzik exit is incidental. The real story here is the John and Bob relationship – or lack thereof. Since late 2003, when Diamond lost out to Varley in the race to be chief executive, detractors have whispered that the punctilious Englishman and the suave American co-exist uneasily. They are certainly very different but they do complement each other and I am inclined to believe a source who says: “John and Bob have mutual trust and respect. It is a relationship that works.”
If Diamond hadn’t wanted to work with Varley any more, he would have quit a long time ago. Financially he can afford to do what he wants. Moreover, Diamond is not petulant nor is a lengthy campaign of gnat-like back-stabbing his style. Nevertheless, Diamond and Varley share a big challenge. They need to squelch once and for all rumours that they avert their eyes when they pass each other.
Dubai, Mumbai, Shanghai or good-bye
Roger Jenkins recently ranked at number 784 in the Sunday Times’ 2008 rich list. He has a personal fortune of £100 million and has been head of structured capital markets at Barclays Capital for many years. He is a tax specialist, but his mandate was expanded in 2006 to include private equity. In April, it was announced that he had been given an additional role as chairman of Barclays, investment banking and investment management, for the Middle East.
As the oil price soars, bankers are flocking to court those with petro-dollars. We all know that investment banking is about quickly reallocating resources to the areas where profitable business still exists. A cynic cackled down the phone: “In investment banking now, it’s Dubai, Mumbai, Shanghai or good-bye.” A more sober source told me: “In the next few years, a new generation of bankers will make their fortunes in the Middle East much as Asia was the place to be in the last 10 years.” I note with interest that Citi has recently relocated two senior bankers – Alberto Verme, co-head of global investment banking, and Atiq-ur Rehman, co-head of EMEA capital markets origination – to Dubai.
Jenkins’ Middle Eastern role followed the recruitment by Barclays in late March of comely Gay Huey Evans as vice-chairman of investment banking and investment management. Huey Evans will be in charge of Barclays’ relationships with sovereign wealth funds. Devoted readers will know my views on the powerlessness of the vice-chairman position. But visiting the sovereign wealth funds in the next few months bearing a Barclays business card will be a tough assignment.
Last July, China Development Bank and Singapore’s Temasek Holdings spent some £2.5 billion purchasing Barclays’ stock, paying about £7.20 a share. In late May 2008, the Barclays’ share price hovers around £3.90: a teeth–gnashing loss for a 10-month investment. Sovereign wealth funds (“SWFs”) or should that be Sniffling, Wailing, Functionaries are long-term investors but no-one likes to get it that wrong. Moreover, Barclays’ senior management face a dilemma. Barclays might need to do a rights issue as its tier-1 capital ratio is below the target 5.25%. Barclays has dithered about seeking cash from shareholders and, since finance director Chris Lucas’s ambiguity about capital-raising options during the trading update in mid-May, the share price has wilted worryingly. A mole sniped: “If you’re going to call on shareholders, you’d better be first at the feast not last into battle.” Barclays has vacillated. Might this be because the aggrieved Asian investors have put their collective foot down? What do you think?
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