By Steve Slater
LONDON, June 28 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.
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
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.