Barclays: Winters and O’Donnell tipped for top jobs

 
Exterior of Barclays HQ Who will fill the top jobs at Barclays?

From my conversations with senior Barclays sources, I have learned there is a favoured candidate for each of its top vacancies.

The former head of the civil service, Lord O'Donnell, is the board of the bank's preferred choice as new chairman.

And Bill Winters, the former JP Morgan banker, is the front-runner to succeed Bob Diamond as chief executive of the bank.

There is only one proviso (quite an important one): neither has been formally offered the positions (it is too early in the process) and it is not clear whether either would actually take it.

Why do they stand out among potential candidates? Well it is partly for their track records and partly because they are seen as acceptable to the Bank of England, the chancellor and the FSA (with a caveat, as per below) - a constituency which, in the light of the Libor scandal, is regarded as particularly important.

In Mr Winters' case, he is currently conducting an internal review for the Bank of England into one aspect of its performance since the 2008 financial crisis. And he was a member of the Independent Commission on Banking, set up by the chancellor, which recommended that a ring fence be put around the retail banking operations of giant universal banks like Barclays.

What however makes Mr Winters appealing for the Barclays board is that he is a former investment banker who eschewed much of the reckless behaviour of his contemporaries. As I mentioned in an earlier note, as co-head of JP Morgan's investment bank he sounded an alarm that the risks being taken by its Chief Investment Office (CIO) - the part of the bank that recently announced a loss of more than $5bn - were not transparent enough (and see here for more on Mr Winters).

His vocal unhappiness at the governance of JP Morgan's CIO, that it was a discreet trading operation answerable only to the chairman Jamies Dimon, and whose deployment of the bank's precious capital could not be scrutinised by other senior executives, was one of the reasons Mr Winters was pushed out of the bank in the summer of 2009 - which now looks like a badge of honour.

Here is the thing: Barclays' investment banking operations are so huge and complicated that its board is concerned that reforming its culture requires an investment banker to be at the helm of the bank; and the point about Mr Winters is that he is felt to be someone who would have the expertise and credibility to carry out those reforms.

Barclays' board cannot think of many other potential candidates who would both have the reforming zeal and would be able to command the respect of the bank's serving investment bankers (Richard Meddings of Standard Chartered is someone whose name is also under consideration).

Outsiders in

Oh, and by the way, it is clear to me that Barclays has concluded - following the decision last Thursday of its deputy chairman Sir Mike Rake to notify his colleagues that he no longer wishes to be considered for the chairman's job - that both the role of chairman and chief executive will be filled by outsiders.

Mr Winters' appointment would not be uncontroversial. After all, to state the bloomin' obvious, he is an investment banker - who, as a breed, are not flavour of the month. And he is American.

So one American investment banker, Mr Winters, would be replacing another, Mr Diamond. If acerbic comments in the Daily Mail matter to Barclays' non-executives, they will pause for a moment before offering him the post.

There is also another complication with his appointment. He has set up a business, and buying him out of it might be expensive and controversial.

As for Lord O'Donnell, his record as head of the civil service and as a policymaker is widely respected.

His problem (to make another unbelievably obvious point) is that he is not a banker, although he is currently working as an adviser to Canada's AAA rated TD Bank. And when he was head of the treasury, he took a close interest in financial regulation.

Given that the FSA has said it wants only those with knowledge of banks to serve on banks' board, it is not clear if Lord O'Donnell passes the FSA expertise threshold. It would be quite something if the FSA said the erstwhile most powerful individual in Whitehall was not capable of overseeing a bank.

UPDATE 15:20 BST

My strong sense is that the FSA would approve the appointment of Lord O'Donnell as chairman of Barclays, were he to be formally offered the job.

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

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  • rate this
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    Comment number 74.

    Hold on Robert! So it's important that the appintment has got to be aceptable to The B of E, The FSA and The Chancellor. Don't you think that someone not acceptable to them might get a better grip on things? For a start terminate all these Complex Financial Instruments which nobody understands - until they go horribly wrong.

  • Comment number 73.

    All this user's posts have been removed.Why?

  • Comment number 72.

    All this user's posts have been removed.Why?

  • Comment number 71.

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  • rate this
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    Comment number 70.

    I do find the revolving door between public and private sector worrying.

    How can we have any trust that our polliticians and officials are honest and trustworthy when it is common practice for them to follow big money decision making whilst in office with big money employment with businesses their official decisions benefitted.

    Oh ... of course, we can't.

  • Comment number 69.

    All this user's posts have been removed.Why?

  • rate this
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    Comment number 68.

    Jobs for the boys, but then this is why we're still in the state we're in with banking reform.

    First we had a recommendation to split the casio banking with high street banking, then we had a ringfence between the two and soon it will be business as usual.

    That's nice relationship between British politics and the City.

  • rate this
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    Comment number 67.

    Some US commentators suggested some weeks ago that it would be better to be just below the level of CEO - e.g. Deputy CEO or vice-CEO. That way you'd get paid just about as much, but don't get dragged before the Commons' or Senate Committees, or end up with your name trashed in the media globally.

    Mike Rake clearly isn't daft then!

  • rate this
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    Comment number 66.

    The other great problem - would either appointment actually restore either Barclay's or the UK banking industry's credibility internationally?

    I'm really not at all sure that Barclay's hasn't been mortally wounded by all this - especially if anything else comes out of ongoing investigations.

    And we all feel really confident that would never happen, don't we?

  • rate this
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    Comment number 65.

    We're too timorous.
    At our worst we sound like Mervyn King and John Kay at their most mealy-mouth radical - no sense of socialist structure no sense of equality & without the guts necessary to recommend REAL change.

  • rate this
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    Comment number 64.

    Surely both jobs are poisoned chalices? Surely there must be more worms to come out of the woodwork at Barclays (yeah and at other banks too).

    And when such worms come out who will the first to be dragged in front of the Select Committee or Enquiry? The CEO and the Chair.

    Both jobs strike me as a hiding to a losing before very long.

  • rate this
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    Comment number 63.

    Dare I say it, but I don't think you guys think radically enough. 'Getting the right bloke for the job' only really works if the whole industry is organised properly, if wealth & income are properly distributed & if the labour market is free of prejudice towards the priviliged & operating justly Then and only then the 'bloke who looks right' probably is
    Otherwise it's back to the drawing board
    .

  • rate this
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    Comment number 62.

    Would have thought old school ACIB qualified banker from within Barclays ranks would have been a good choice for either Chair or MD. Then it would not matter quite so much whether the other was a Barclays insider or from outside in the UK or an international.

    Questions are starting to be asked as to how good UK Civil Service actually is so would think O'Donnell is bad choice for anything.

  • rate this
    -1

    Comment number 61.

    The UK has become a moribund economy.

    Our energy suppliers have been sold off.
    We survive by magicking money out of thin air.

    The banks need to employ bosses that can continue this trend.
    Getting us and our youngsters into more and more debt.

    The EU meanwhile looks on approvingly as our traditional industries implode. Coryton? Who is to be next in this long line of redundancies?

  • Comment number 60.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 59.

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    Comment number 58.

    I have applied to become Barclays CEO. (Honestly.)
    My programme:
    (a) Invite retired bank managers to return and restore traditional branch-based banking & lending;
    (b) Separate casino from retail;
    (c) Restore staff morale;
    (d) Buy-back shares to reduce 'profit only' drivers.
    I am a truly modern banker - in my days as a cashier (1960s) I set a new branch record for small differences in cash!

  • rate this
    +3

    Comment number 57.

    On GoD

    Gus was Permanent Secretary at HM Treasury before becoming head of the civil service. His gongs and brighton (pier!) age are the result of the office he held.

    He stood by and created the ballooning debt mountain that led to the crash. He is absolutely NOT suitable fro any job in banking (or Governor of the Bank of England) He should garden.(at the very least!)

  • rate this
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    Comment number 56.

    Remember Andy Hornby (HBOS) and Fred Goodwin (RBS) and their Chairmen who appeared in front on Parliament and confessed they had no banking experience or qualifications - same is the case for O'Donnell who is just an ex civil servant. Also remember what happened to Nat West (Lord Alexander) appointed a non banker - it went down the gurgled. Also O'Donnell is even more up conceited than Diamond!

  • rate this
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    Comment number 55.

    Big banks are still dumping HUGE amts of toxic derivatives onto little taxpayers. The concentration of power/control over global economy of a handful of VERY LARGE banks means that the entire system is weak.
    Why Aren't They Being Broken Up? In fact why are they 30% bigger than before crisis?
    Hint: Guess which institutions are among biggest lobbyists & campaign-finance contributors?

 

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