In depth: Bob Diamond ran Barclays with obsessive zeal

Jonathan Prynn, Business Editor @JonPrynn

3 July 2012

Bob Diamond has been described as the last of the “Masters of the Universe”, a money-obsessed Eighties throwback who ran his beloved Barclays with an obsessive, almost religious, zeal.

For the public, the 60-year-old will always be the typically American poster boy for avaricious bankers who didn’t “get it” after the financial crash.

But for all that, there are still legions of admirers in the City who insist that his efforts alone kept Britain in the investment banking global big league. One senior City figure said: “You shouldn’t forget that to many people in London this man is an icon.”

Unlike many American bankers who relocate to the City he has thrown himself into London life. As a Chelsea season ticket holder and sponsor of the Premier League, the sports-obsessed Diamond was able to present the trophy to club captain John Terry three times between 2005 and 2012. His wife Jennifer and their three children live at the family home in Chelsea and even after the vilification of recent years he is expected to keep a London base, although friends said the family would return to America “sharpish”.

His dream of landing one last big job in America — perhaps as chairman of the Federal Reserve or chief of one of the biggest US banks — now seems to be over but commentators say he is likely to reappear in the lower profile world of private equity — the route taken successfully by another fallen business titan, BP’s former chief Tony Hayward.

The EastEnders fan lives a gilded life but avoids the worst of the “Porsche and Petrus” ostentation that has made investment bankers so hated. He has spectacular homes in Manhattan, overlooking Central Park, and on the New England island of Nantucket.

Diamond, who has built up a personal fortune estimated at more than £100 million, is also a philanthropist who has a picture of himself shaking hands with the Pope in his office,

He is a trustee and generous personal backer of the Mayor’s Fund for London and Boris Johnson once said “Bob Diamond is a Mayor’s best friend”. The close relationship also helped Barclays seal the sponsorship of the Boris bikes cycle hire scheme.

The staunch Republican joined Barclays in 1996 when its then boss Martin Taylor was preparing to sell off the bank’s struggling investment banking arm BZW. Insiders say Diamond fought a “tooth and nail” internal battle against the decision and made it his mission to prove his hunch right.

At BarCap, as it became known, Diamond ran a battle-hardened team of loyalists under the famous “no jerks” rule. This said that anyone who rocked the boat, fell out with colleagues or embarrassed the bank in any way was cut loose without hesitation. When it emerged that a rowdy group of BarCap investment bankers had lavished £44,000 on a meal at the St James’s restaurant Petrus to celebrate a deal, they were sacrificed. In a newspaper interview Diamond said “to have acted in that way was inexcusable”.

Former colleagues describe how Diamond’s inner core of largely American advisers made sure that his wishes were swiftly and efficiently fulfilled.

One said: “I hesitate to make the comparison with Don Corleone but he was very good at making sure that people did what he wanted without explicitly saying so.

“These messages would be passed on: ‘Bob is very disappointed’ or ‘Bob doesn’t want that to happen’. You never got them from Bob himself, you always got them from one step down. Bob could be very charming, he tends to leave the bad news delivery to side-kicks.”

As BarCap became increasingly successful, his powerbase within Barclays grew and threatened the authority of the more diffident chief executive John Varley, a member by marriage of one of the Quaker families that founded Barclays more than three centuries ago.

One senior adviser said executives on the upper floors of Barclays Canary Wharf headquarters were divided into “Bob’s people” and “John’s people” — you couldn’t be both. “I think John was a little scared of Bob and suspect Marcus Agius is too.”

Diamond put his ferocious ambition down to his Massachusetts school teacher parents. He was the oldest boy of nine children and grew up as Bob Jnr which he said instilled in him “a high need for achievement”.

For all that, it was eventually the blinkered will to succeed that brought him down. He had made a series of disastrous political miscalculations since becoming Barclays’ chief executive in 2010 — the worst being the claim that the time for bankers’ remorse and apology “needs to be over”. As one City commentator said: “That was always going to come back to haunt him.”

And it has.

Q&A

What happens next?

Barclays will remain in the firing line for the foreseeable future. Bob Diamond will have to defend himself in front of the Treasury Select Committee tomorrow. Meanwhile David Cameron has announced an inquiry into the banking scandal due to be headed by the committee’s chair Andrew Tyrie, although his role is now in doubt.

Who will run Barclays?

The top of the company is in chaos. The board has had to recall the part-time chairman Marcus Agius who resigned yesterday to provide emergency cover for the deposed Mr Diamond while a successor is found. It will not be an easy task to find an outsider prepared to take on the job. Candidates will have seen how Stephen Hester has been publicly vilified since he took over at RBS. The favourite “clean hands” internal candidate is seen as Antony Jenkins, head of retail and business banking.

Are more resignations likely?

Almost certainly. City speculation is growing that Mr Diamond’s trusted investment banking deputy Jerry del Missier, who was promoted to become chief operating officer last month, will be next out of the door.

Will criminal prosecutions follow?

Not immediately, but the Serious Fraud Office has promised to announce “within weeks” whether charges over the Libor fixing scandal are legally possible.

What does it mean for Barclays customers? It is unlikely that high-street bank or Barclaycard customers will notice any change despite the turmoil at the bank’s headquarters. Both are run by

well-established management teams whose day-to-day operations are largely independent from the highest executive level of Barclays.

In depth: Bob Diamond ran Barclays with obsessive zeal

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