The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2020 Euromoney, a part of the Euromoney Institutional Investor PLC.
Opinion

Abigail with attitude: Feuding and fiefdoms?

“If you’re going to call on shareholders, you’d better be first at the feast not last into battle.”

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.


"Paul Idzik leapt like a mountain goat over a Barclays security barrier to prove that there was no security"

"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? 

“Barclays’ shareholders should sing hymns of praise to John Varley for not purchasing ABN,” a rival banker told me. But did you notice that in May, Barclays stole a 40-person M&A team from ABN Amro? Barcap’s senior management seem proud of their catch. I am more sceptical. Would anyone who was a fearless practitioner still be practising at ABN? ABN was not exactly world-class even before hostile hedgie Chris Hohn demanded that unremarkable Rijkman Groenink dismember it. And surely, outstanding staff would have been snaffled during the months when Barclays and RBS were fighting over the ABN carcass? I discount rumours that Barclays is keen to purchase either UBS or Lehman Brothers to further expand its investment banking presence. But I am also dubious that the ABN investment banking team will add real value to the Barclays Capital franchise. After all, according to Dealogic, ABN Amro was not ranked in the top 10 houses for global M&A transactions in 2006, the last year of its independence.

Girl power

As a former female banker, I am delighted by Gay Huey Evans’ appointment. However, I fear that girl power has peaked in financial services. White males continue to dominate as chief executives – Vikram Pandit of Citi and Clara Furse of the London Stock Exchange are notable exceptions. “In the last year, Zoe Cruz has left Morgan Stanley and with Pandit showing up at Citi, it is unlikely that Sallie Krawcheck will move up the hierarchy,” a source said. “Those were serious heavy-weight contenders for chief executive slots. We may be talking about a lost generation.”

Of course, some argue that women in the workplace are an unnecessary complication: that sex and the city can become sex in the city. A reliable mole reports an intriguing story from a leading US firm. The head of a department, Henry, was attracted to one of the secretaries, Susan. Surreptitious glances at the water cooler progressed to collegial conviviality. And then Henry, who was married, invited Susan for dinner. The inevitable inevitably happened: dinner, nightclub, late-night coffee and breakfast. Somehow, Susan added an element to Henry’s life that his devoted wife, Davina, ensconced in the Ascot mansion, could not provide. So Henry rented a flat in Mayfair for Susan, paid her a monthly allowance for necessities (regular French manicures, bikini waxes and Italian silk underwear) and Susan left the bank: her life was so busy that she didn’t have time to work any more.

A year later there was a departmental reorganization and a senior woman, Winifred, was passed over for promotion. A man was appointed instead. Winifred made a veiled threat to sue the bank. Henry, she claimed, was inherently prejudiced against women. Indeed, he saw all women as his inferiors and as sexual playthings. Winifred cited the Susan affair, which had leaked out through the secretarial bush telegraph. A meeting was organized with Carol from compliance.

At the meeting, Henry sat quietly facing his accuser. Carol however was loquacious: “Winifred,” she said. “We don’t see that Henry’s relationship with Susan proves anything about his attitude to female colleagues. In fact, his behaviour has been extremely professional. Here is the compliance department file note when he informed us that he had invited Susan to dinner, here is the email informing us that he had started a sexual relationship with Susan and here is a copy of the legal agreement that he asked a top London firm to draw up when he started supporting her. Given Henry’s transparency with the bank, we will argue strongly that there has been no conflict of interest or abuse of his position. But we would ask you to keep all this information confidential as Henry’s wife is unaware of the situation and we wouldn’t want to upset her, would we?”

I promise you this story is true. And you thought working in compliance was boring?

Being married to a successful financier is no bed of roses. Your bank account may bulge but quality time with your husband is meagre. Sometimes a woman wants more than a man who travels constantly and is exhausted, grumpy and manacled to his BlackBerry when at home. Unsurprisingly, divorce is a hazard that hovers over the head of the 40-something male investment banker. Suddenly his weary wife snaps, hires a reptilian lawyer and, before you can say constant proportion debt obligation, half your fortune has vanished. I was therefore amused to learn that the Bloomberg story “Ex-wives capture future bonuses in UK court delays” was one of the most-read Bloomberg stories on the day it was published (April 23 2008). The case P v P decided that a UK banker must give his ex-wife more than half of his £17 million net worth even though Mr P earned a significant part of this between their separation and divorce. “Frankly,” an investment banker’s wife grumbled, “You’d think these male bankers would have better things to do during the day than pore over such a story. Especially as this year there aren’t going to be any bonuses.”

And talking of roses, the gala preview of the Chelsea Flower Show was held on May 19. If you are not invited to the private view (held immediately after the Queen has visited), you are a social insignificant and should slink out of town claiming to be abroad on business. “I’m always surprised so many important people bother to go,” a colleague sniffed jealously when he heard I had been invited.

The first evening is a giant cocktail party without the disadvantage of being stuck in a dark corner with someone unappealing. “The joy of Chelsea,” claims one source, “is that you always have an excuse to keep circulating.” Despite the prevailing economic uncertainty, banks insist that they cannot curtail their gala night hospitality. “Clients are enraged if they’re not invited,” a senior banker said. “And Chelsea is one of the few corporate events that wives love.”

Amid the blooms, I chatted with senior bankers including the handsome Franck Petitgas of Morgan Stanley, the charming Michael Cohrs of Deutsche Bank, and debonair David Reid Scott of Hawkpoint. In the distance, I glimpsed veteran deal-maker David Mayhew, chairman of JPMorgan Cazenove; Clara Furse, chief executive of the London Stock Exchange; Tom Kalaris, head of Barclays’ wealth management business; Damon Buffini, the low-key head of private equity group Permira; and Mervyn King, governor of the Bank of England. 

King, who bears an uncanny resemblance to a bespectacled chipmunk, is unpopular with his stakeholders and the Mervyn Kompass joke circulating in the City would seem to prove this.

King, who bears an uncanny resemblance to a bespectacled chipmunk, is unpopular with his stakeholders and the Mervyn Kompass joke circulating in the City would seem to prove this.  

Mervyn's Kompass


The UK authorities handled badly the decline and fall of mortgage lender Northern Rock. Mervyn King, chancellor of the exchequer Alistair Darling and Hector Sants, chief executive of the Financial Services Authority, gave the impression that they were muddling through a tidal wave of treacle rather than adroitly surfing the wave of a crisis (vide Ben Bernanke). Apparently King, who bears an uncanny resemblance to a bespectacled chipmunk, is unpopular with his stakeholders and the Mervyn Kompass joke circulating in the City would seem to prove this. To the north are the chancellor and the prime minister, who dislike King because he lectures them and tells them they are doing everything wrong; to the south are the Bank of England staff, who dislike King because he lectures them and tells them they are doing everything wrong; to the west are market participants such as bank chief executives, who dislike King because he lectures them and tells them they are doing everything wrong; and to the east are other central bankers who dislike King because he lectures them and tells them they are doing everything wrong. Hardly a Golden Compass, is it? It’s often said that management is not a popularity contest but it’s nice to have a few friends somewhere. René Karsenti, president  of the International Capital Market Association, however, is universally liked. I was delighted when he invited me to Icma’s annual conference in Vienna. European Central Bank president Jean-Claude Trichet gave the keynote speech and I caught up with many old friends, including Michael Ridley of JPMorgan Chase, Paul Hearn of BNP Paribas, Brian Lawson of Nomura and Bob Graffam of Darby Private Equity. I also attended a dinner organized by the International Swaps and Derivatives Association for its departing chairman, Jonathan Moulds. Jonathan, who is president of Bank of America, EMEA and Asia, has given four years’ unstinting service to Isda and hands over to the personable and erudite Eraj Shirvani, co-head of Credit Suisse’s European credit business. “The transition between Eraj and I has been exactly what I wanted: extremely smooth,” Jonathan told me. I enjoyed meeting Isda’s chief executive, Bob Pickel, and senior members of his staff. I look forward to following Shirvani’s career and his chairmanship of Isda.

The transition at Isda between Jonathan Moulds and Eraj Shirvani at ISDA has been “extremely smooth”

The transition at Isda between Jonathan Moulds and Eraj Shirvani at ISDA has been "extremely smooth"

How was your month? Please send news and views to abigail@euromoney.com.




See more from Abigail Hofman

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree