Bob Diamond is a brilliant banker, one of the most
successful of his generation. Diamond has also been a lucky
banker. Today, he exhausted his reserves of good fortune.
Tied to luck is judgment. For all his qualities,
Diamond’s judgment has often been questionable.
He’s survived that failing on numerous previous
occasions, but not this time.
Over the past 48 hours, stories started to leak that
Barclays would try to pin some of the blame for its role in the
Libor scandal on the Bank of England – that, in
some way, the Bank was complicit in allowing banks to report
much lower interbank funding costs at the height of the
financial crisis because of the fear that, if the real rates
were revealed, it would lead to a run on the banks.
Those leaks came as no surprise to Euromoney. It was a line
we’d heard from various Barclays insiders as soon
as the fine against the bank was announced last week.
Yesterday, it was further speculated – probably
leaked – that Diamond planned to bring the Bank of
England’s involvement up during his appearance at
the Commons Treasury Select Committee on Wednesday.
For a board that had up to that point been supportive of
chairman Marcus Agius even threw himself under the proverbial
bus to try to protect his CEO – this was probably
the final straw.
Diamond should have taken a page from the
Jamie Dimon playbook. As soon as the JPMorgan CIO losses
were fully revealed, Dimon did not mince his words. He blamed
himself. He blamed the bank. He didn’t point the
finger elsewhere. He fired the people directly responsible. He
was scathing in his assessment of his own
institution’s ineptitude. It probably pained him
to do it, but it worked – Dimon came out of a
Congressional hearing with his reputation enhanced and his
position as strong as before, despite losses that could reach
Diamond and Barclays made some of the right noises. But they
also made some ill-judged ones as well – none more so
than to seemingly threaten to involve the UK’s
Sorry. We messed up. That’s all Diamond
needed to say. Fire the people responsible. That’s
what Diamond needed to do.
When he didn’t, the board was left with little
choice but to ditch the horse it had backed so strongly. This
is not a time to be fighting regulators or politicians.
That’s why, less than 24 hours after Diamond wrote
perhaps the longest letter to employees in history, setting out
exactly what he was going to do to restore
Barclays’ reputation, he finds himself out of a job.
What’s next for Barclays?
Barclays now finds itself in the extraordinary position of
having a chairman who has already resigned as acting CEO. What
a mess. Agius resigned to try to staunch the blood flowing from
his then chief executive’s office. It was never
going to work – not when the front pages of tabloids
such as The Sun were calling for
Who takes over? In fact, what comes first – a new
chairman or a new CEO? You’d have thought any
chairman worth his salt would want to have the final say in the
appointment of his new chief executive – and the new
chairman of Barclays will need a cellar-full of credibility and
experience if he or she is to turn things round quickly.
For chief executive, it is not easy to find strong internal
Rich Ricci, head of the investment bank, is another US
investment banker, like Bob;
Jerry del Missier, who, just a few days before the Libor
fine was announced, moved out of the investment bank to become
group COO, may be Canadian but will be viewed similarly. But he
is expected to
follow Diamond out of the bank.
Both del Missier and Ricci are incredibly close to Diamond.
Ricci needs to be persuaded to stay on. He is loyal to the
institution, and he will know that the last thing his friend
and mentor will want to see, now he has left, is the
institution fall apart.
Tom Kalaris is another Diamond acolyte who grew up through
the investment bank, but has since made a strong impression in
the less controversial world of wealth management.
He’s a classy individual who would probably do a
good job, but may still be too close to Bob.
The other internal candidate would be
Antony Jenkins, chief executive of retail and business
banking. He’s British and not an investment
banker, which might give him a head start. He is seen by many
as a solid, reliable business leader – but the trouble
is, not by many of the people at the old Barclays Capital that
now dominates the group. At Euromoney, we’ve heard
various sneering appraisals of Jenkins’
credentials for group CEO when we’ve mentioned his
name to traders and investment bankers. Could Jenkins keep the
group together and harness the investment bank?