Some say that Barclays’ interim trading statement was disappointing. Group profit before tax for the nine months ended September 30 fell by 19% to £4.5 billion, profit before tax in the investment banking and investment management division was £1.9 billion (down 38% from 2008), impairments rose in the UK retail banking division and the cost/income ratio spiralled higher in the investment bank. It should be noted, however, that last year Barclays had a substantial one-off gain on the Lehman acquisition, and that it continues to increase revenues faster than expenses with a positive cost: income jaws of 7%. The bank also said that it expected impairments for the full year to be around the bottom of its anticipated range for 2009 at £9 billion.
When JPMorgan’s chief executive, Jamie Dimon, dispensed with the services of Bill Winters, co-head of the investment bank, in September, he was effectively saying: "This firm is so stable, we can afford management upheaval." I read the tea leaves over at Barclays slightly differently. Seegers was not universally popular at the bank: indeed some talk about an imperious management style. Frits apparently had a tendency to call underlings, in different time zones, in the middle of the night to ascertain whether they would be available if he needed them. Note to future Seegers serfs: "Switch your mobile phone off when asleep." An insider insisted: "Frits may have been abrasive but he upped the metabolic rate of his businesses." As signalled in my November column, Tom King, Citi’s former head of European banking, has now joined Barclays Capital and will replace John Winter as head of investment banking, EMEA. Winter moves to become chief executive of Barclays’ corporate division.
The winner in this new structure is, of course, Bob Diamond. The official line is that he had spare capacity given the sale earlier this year of Barclays Global Investors to BlackRock. My mind wanders down another path. Could it be that Diamond and Varley have reached a Granita-type accord? According to political folklore, former UK prime minister Tony Blair and current prime minister Gordon Brown made a pact at the Granita restaurant in Islington in 1994. The two men are alleged to have agreed that Blair would become leader of the Labour party but would step down in due course to permit Brown to take over. Diamond is 58. He probably has one more big job left in him. Diamond was approached by Bank of America to interview for the chief executive job but declined to take it on. Perhaps as an incentive to stay with the British bank, I hear that Diamond was promised that Varley would stand down (maybe as early as 2010), and he would become chief executive. It could be that Varley will step up to the chairman’s office. I hope both men stay with the bank. I believe they complement each other. An insider commented: "I doubt there is any formal agreement. That would probably need to be declared to the market. However, if John decided to move on, would Diamond be a strong contender for the CEO slot? Absolutely, of course he would be."
Seegers is not the only senior manager to leave Barclays this year. Roger Jenkins, the former chairman of the investment bank in the Middle East, departed this summer. Maybe it’s a blessing in disguise that Jenkins has moved on. The popular perception is that bankers broke the system and now they must wear sackcloth and ashes and repent. Flaunting wealth is frowned upon. Jenkins, a clever and successful tax specialist, is married to Dijana, or Diana as she prefers to be known. Mrs J loves the limelight, mingling with famous people and spending extravagantly: "haemorrhaging money" is how one source put it.
Although I have only met Diana once, I am developing a steadfast admiration for the attractive Bosnian refugee. She has a talent for self-promotion that makes most investment banking wives look like anodyne Annies. In a recent eight-page spread in Tatler magazine featuring the family’s Malibu mansion, Roger Jenkins mused: "I think – I hope – I am with Diana for a very long time." Delicious Diana is more pragmatic: "I might be with him or I might not be with him. Who knows what tomorrow brings? Nobody has control over the future."
In this era when there is so much despondency about the failure of women to penetrate the most senior echelons of bank’s senior management, I am starting to ask myself the question: "Why bother?" Perhaps the best career for a clever girl like Dijana is to marry a wealthy investment banker. Who needs to slog down to Canary Wharf as dawn is breaking, sit crouched behind a screen for 12 hours a day and report to a mediocre man when you can live in California and spend your husband’s money on a variety of interesting projects? Of course, girls, it’s vital to produce a few children. And do make sure the houses are in your name. Then you can live happily ever after even if matrimonial harmony falters.
Of course it’s not just bankers and their spouses who live extravagantly. A story reaches me of a school, frequented by children of well-heeled City folk, which had recently been discussing increasing the diversity of its students. "We’re all rather upper-middle-class," admits the banker who recounts the tale.
The discussion was prompted by the arrival of a new pupil. In his application form, the candidate’s father – not a banker – had written a note asking if the school had helipad facilities and, if not, where the nearest ones were. Said pupil joined the school, lack of helipad notwithstanding, and soon it was his birthday. By this time his circumstances were more familiar to the other parents. One asked: "So given you actually live in a castle, I guess you won’t be having a bouncy castle at your birthday party?" Child replies: "No, my dad’s got me a bouncy council estate."
Next time: Someone who has decided slogging it out in the City is a viable option and the new generation of rising stars.