Diamond ‘hounded out by MPs’

 
Bob Diamond

It is a soap opera like no other I can remember in my 30 years (well 29 years to be precise) of reporting on the City.

On Friday night Barclays board, in an emergency meeting, decided that both Bob Diamond and Marcus Agius should tough it out: they did not need to quit their respective roles of chief executive and chairman.

Then on Saturday night, Marcus Agius took a personal decision to become the lightning rod for the criticism, to protect Barclays and Mr Diamond, so he decided to resign - which he told colleagues about on Sunday morning and was confirmed yesterday.

But the lightning continued to strike Mr Diamond. And so last night, after long discussion with colleagues, Mr Diamond decided go.

Why?

Well one Barclays source tells me he felt hounded out by MPs. He felt the government's planned parliamentary enquiry about standards in banking would be all about him, as would a longer judicial investigation demanded by Labour.

"Bob felt all his time would be spent preparing evidence, submitting testimony, thinking about the media implications, and so on" said this source. "He would have no time to run or fix the bank".

So he has quit, with immediate effect, to save the bank he loves, as it were.

And, in an extraordinary twist, Mr Agius is temporarily becoming more powerful at Barclays. He is becoming the group's executive chairman, pending the recruitment of a new chief executive.

This brings risks for Barclays. It is famously one of the most complex and large banks in the world. And Mr Agius has never had day-to-day operational responsibility for any bank remotely in its league (he was a corporate-advising investment banker at the London arm of Lazard for most of his career).

In fact Barclays sheer size and complexity was one reason why shareholders were not baying for Mr Diamond's immediate departure. They took the view that Mr Diamond, who was credited with creating the sprawling modern form of Barclays - global, huge on Wall Street - was probably the safest pair of hands to steer it away from accidents, in the absence of an obvious successor.

And, as one influential investor put it to me, this is not an easy time to be running any British bank, with the eurozone lurching from crisis to crisis and the UK in recession.

But if Mr Diamond felt that it was politicians who pushed him towards the exit, there was also a nudge from investors.

How so? Well the price they were demanding for him to stay and clean up the bank was that he should surrender some of the vast rewards he had accumulated from a culture at the bank now acknowledged to be flawed - and which investors hold him partly responsible for.

They wanted either a claw back of past bonuses and spoils from long-term incentive schemes, or the surrender of what he could earn from long term incentive plans that haven't yet vested.

If he simply gave up the maximum he could be paid from past incentive schemes, this would deprive him of up to £16m, according to the consultancy Manifest.

Or to put it another way, running Barclays was very unlikely to be anywhere near as remunerative for Mr Diamond as it has been.

Who knows whether this influenced his decision to quit?

Tomorrow Mr Diamond has the opportunity to explain himself to a subset of those very MPs who have made life so horrid for him, when he gives evidence to the Treasury Select Committee.

As you know, I am particularly interested to hear what he will say about a secret conversation he held in the autumn of 2008 with Paul Tucker, deputy governor of the Bank of England - and whether he felt Mr Tucker was in anyway encouraging Barclays to understate its borrowing costs.

 
Robert Peston, economics editor Article written by Robert Peston Robert Peston Economics editor

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  • rate this
    0

    Comment number 490.

    444.

    I repeat 444. I note that I had a negative comment from someone who doesn't like the idea of innocent before proven guilty.

    I was of course correct in stating that "Bob would fend off all the mischievious baggage laiden questions". And I repeat that so will Paul Tucker.

  • rate this
    +1

    Comment number 489.

    488.zedhex

    I think facing the collapse now and don't kid yourself the Economy ever recovered.

    Fair enough Trillions were pumped in at the expense of society.

    House prices would not be so high if Interest Rates were at normal level. So it would be all relative. Borrower in money terms would potentially pay same % income at higher rate as they could not borrow so much in the first instance

  • rate this
    -1

    Comment number 488.

    Adding to that: If it had been a politician who had manipulated the Libor they would crowing it from the rooftops to this day. People don't seem to realise that we would have faced a much greater collapse had they NOT manipulated the Libor

  • rate this
    +2

    Comment number 487.

    Time for some simple facts:

    1. If it had been the BoE who had manipulated the Libor they would have been celebrated as the knight in shining armour who saved british banks in 2008.
    2. Bob Diamond and his ilk actually do more for Britains economy than all of the braying donkeys in parliament and grub street put together.
    3. The economy is far too important to trust to politicians

  • rate this
    +1

    Comment number 486.

    I do so agree. When will we put all main needs water gas electric post rail & banks do not need shareholders to satisfy all the profits should go back in to the companies? better management than before. No bonus should be paid. When most people today are just grateful for a job & a wage. Those bonuses could have cleared the countries debit problem.

 

Comments 5 of 490

 

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