Tag Archives: Bob Diamond

Barclays Bob

Some may be wondering about the timing of Bob Diamond’s decision to “walk” from what is the best-paid and most high-profile banking job in the UK. Some may believe that he was hounded out by the banking establishment.

I reckon that he walked in order to free himself-up ahead of the ridiculous inquisition by the Treasury Select Committee. I sincerely hope that they leave their briefcases on the table in front of them and remember to wear tin hats – because Barclays Bob is going to give them hell. They will be forced to listen to a few home truths about the conduct of not-only Barclays but the entire politico-banking establishment.

Believe me, Bob knows where ALL the bodies are buried and he’s the first guest at the Wake.

As usual, we’ve had the puerile Punch and Judy exchange between the Prime Minister and the Leader of the Opposition. Both have diminished themselves through their conduct over the last wee. (If that was at all possible)

Meanwhile, the media (and I include the Social Media) have seen an outpouring of hysteria by individuals who hadn’t heard of Libor before last Wednesday. Mob hysteria at its worst.

Mind you, that is so typical here in the UK. First we “denounce”, then the Inquisition, followed by the Inquiry and then it’s back to normal as we look for the next victim.

If there have been transactions which have inflated profits, I hope that in their haste, government Ministers have not forgotten that there may be billions in the Exchequer which will have to be repaid if tax has been generated on illicit transactions.  Inflated bonuses have also been subject to millions in taxation.

It’s not only the banks who are going to have a lot to unravel – but of course, these days no-one thinks before they act.

Starting with the baying politicians and media, a breathtaking lack of understanding of complex banking processes has clearly been demonstrated. The same lack of understanding which was exhibited by the Directors of Banks prior-to, during and certainly after the last bank crisis.

Make no mistake both the Bank of England as well as the Financial Services Authority have been complicit. Those pre-Lehmans LIBOR deals, probably saved the British Government from having to bail out Barclays and as other banks have also doubtless been guilty of the same misdemeanours, the Government will have saved billions on the 2008 bailouts.

(What I mean to say is that the banks were bailed out  – but they weren’t bailed out enough. The last four years of  “rebuilding balance sheets”, non-lending etc have clearly demonstrated that as usual, the government only did half of the job)

It is the Bank of England, the Financial Services Authority and the grubby British Bankers Association which should be standing shoulder-to-shoulder in the dock and hopefully after Bob Diamond has said what he really thinks and knows, they’ll be lined up and taken down.

Today, Mr Diamond, I’m on your side.

Show them Hell!

Barclays out of CONTROL?

A few years ago, I moved away from teaching and coaching the “soft” skills of management and have been concentrating much more on the “hard” skills.

One of the hard skills of management, which everyone running a department or process should know,  is one which appears to be missing in MOST businesses. It is the art of Business Control.

It is very straightforward: POPS.

POPS is a very simple but effective method of structured management thinking.

If the POLICY, ORGANISATION, PROCEDURES, SUPERVISION Business Controls had been applied to the Banking Industry, we would never have had a financial crisis.

“POLICY” is the high-level control and is the responsibility of the Board and Senior Management. They not-only put together the Policy but their duty is to ensure that everything which happens within the organisation is in keeping with Company Policy.

For instance, if  traders fiddle with interest rates and interest rates have been fiddled-with for years without anyone being brought to book – they may be forgiven for assuming that fiddling with interest rates is part of the bank’s Policy and culture.

“ORGANISATION” is about the people. Are the right people doing a particular job? Have they been trained? Have they been communicated with? Do they know what they can and cannot do? Is there a good Management Structure which can report up to Board level?

“PROCEDURES”  : For instance, is a trade or block of trades recorded and checked? Are there “snap” checks and audits designed to check that company Procedures are being adhered to.

SUPERVISION is a day-to-day control (so is the Procedures Control).  This control is the responsibility of the “one-up” manager. The one who is there not the one at meetings. Very often , things happen without day-to-day supervision. For instance, if a trader makes a few dodgy deals, a good manager’s responsibility is to (at least) make the trader know that he could be caught.

Here’s an example of how a thorough Management Audit which looks at specific Business Controls can unearth the REAL cause of an issue. It is also surprising how many breakdowns and corporate crises are the result of a bad or non-existent high-level POLICY control.

In 1987, the car-ferry, The Herald of Free Enterprise sank in Zeebrugge Harbour and 193 people died. There appeared to be a very simple explanation for the “accident”.   The loading doors at the front of the boat (through which cars entered the boat) had been left open.

However, a proper structured  investigation  designed to identify the Root Cause of the disaster was needed.

The doors were left open because one man was asleep when he should have pressed the button to close the doors. Therefore, the PROCEDURES control had broken down. The procedure was that when the boat was about to move, a button would be pressed on the bridge. That would trigger the man to press the button to close the doors.

The direct SUPERVISION control was  was non-existent because the man who should have pressed the button was managed by a senior man who was only in charge of ferry car-parking and not door-closing.

In addition, there was no PROCEDURE for anyone to confirm to the bridge whether the doors were closed or not. It was assumed that once the “close the doors”  button had been pressed, that the doors were closed.

The ORGANISATION control is about the people involved in the process. In this case, the organisation consisted of just ONE lowly manual worker who, on this occasion, was asleep. The  First Officer who pressed his button, immediately assumed that once he had pressed it, his job was over.

The last Control is the highest-level  – POLICY. This control is administered right at the top of an organisation –  by the Senior Management and the Board of Directors.

One may be forgiven for thinking that there is absolutely no way that such a high-level control could possibly have anything at all to do with someone forgetting to close the loading-doors on a ferry.

However, the Root Cause of the Herald Of Free Enterprise disaster WAS a breakdown in the POLICY control.

The Company’s POLICY was to turn the ferry around in 15 minutes.

Consequently, the man who should have pushed the button was tired because he had not slept properly for two days and was already asleep when the boat had docked.

As is often the case, the ultimate responsibility for the sinking belonged to the management.

Today, Barclays banks has a very similar situation in respect of its traders who are alleged to have manipulated LIBOR for purposes of profit!

Was there proper SUPERVISION? Were PROCEDURES in place to guard against improper behaviour? Was the ORGANISATION right? Were the traders only (as far as they understood) acting within Barclays’  POLICY? Did Barclays have a “SELL, SELL, SELL!!!” Policy which encouraged short-cuts and cheating?

A measured, thought-through approach is needed.

The reaction by the media and politicians already suggests that instead, there will be a free-for-all, accusatory, disorganised  non-process, preceded by the customary witch-hunt and a Lawyer Benefit in the shape of an inquiry.

What is REALLY NEEDED is a Management Audit delivered by a team of sceptics NOT PAID FOR by Barclays.

That is to say –NOT Pricewaterhouse Coopers and certainly NOT those Muppets at the Financial Services Authority.

…and on Haiti Earthquake Day

 

Feminist Hilary

U.S. Secretary of State Hillary Rodham Clinton is in Oman today and this morning she spoke to civil leaders at a Town Hall meeting in Muscat.

She said that women can be a major power in the Middle East peace process as well as urging regional leaders to encourage and embrace the rising expectations and aspirations  of Oman’s rapidly rising  youth population.

The Secretary of State went on to cite the example of women in Northern Ireland taking the initiative to meet and be instrumental in the resolution of the “troubles”. She suggested that Arab and Israeli women could provide a similar peace impetus.

“Women played a major role in pushing the politicians to find some solutions,” she said. “It was very clear that there just couldn’t be a divide when people on both sides were suffering in the same way.”

However, she did stress that such an initiative would be long and difficult.

She said that if Arab nations were to succeed in the 21st century they should embrace the aspirations of women and youth.

Tomorrow, Ms Clinton visits Qatar on  before returning to Washington.

 

Treasury Select Committee Muppets

Yesterday’s “grilling”of Barclays boss Bob Diamond was embarrassing to watch. In the real world people such as the members of the Treasury Select Committee would never be around the same table as Mr Diamond because in commerce, they would not be good enough. The quality of question was  appalling and the committee members all showed that what was more on their mind that anything else was the fact that Bob Diamond had a far more successful career that they – and they didn’t like it.

The question from John Mann, Labour MP for Bassetlaw ” Why is it easier for a camel to pass through the eye of a needle  than for a rich man to enter the kingdom of heaven?” produced a bemused silence from everyone, especially the smiling  Bob Diamond who is used to a slightly more focused line of questioning. “I’m stuck on that one,” he replied.

The rest of us were just plain embarrassed, especially when the Chairman of the Treasury Select Committee,   Andrew Tyrie ( Conservative member for Chichester)  added helpfully: “People have been stuck on that for 2,000 years.”

At that point, Bob Diamond must have been imagining that someone had slipped Mescalin into his Highland Spring.

We really must look at recruiting Members of Parliament who are not quite as thick and not so intimidated by someone who earns in a year what they would earn in 10 lifetimes.

What happened to the Politics of Envy? Still there, it seems.

 

Eric Illsley MP

The good news for the self-confessed “tealeaf”  MP is that he can remain an MP and draw his salary for 11 months, even when banged-up.  Work that system, Eric!

An MP’s salary is a lot of snout.

How many MPs are still thinking “There, but for the Grace of God……”

 

Haiti

The celebrities and opportunist politicians are but a distant memory. A year on and Haiti looks more-or-less the same as it did an hour after the earthquake, except that over 1 million people are living in tents and thousands are dying of cholera or malnutrition (that’s a nice word for starvation).

The £5 billion pledged has not materialised and you cannot feed and clothe people on promises.

Let’s not beat around the bush. Since Cuba has matured from dangerous Commie State to Interesting Tourist Spot, Haiti is no longer of any strategic importance. Its agricultural economy does not produce enough to feed its population. It populated by poor black people.

Remember Hurricane Katrina in 2005? Which group was left to fend for itself  for just that little bit too long? Who suffered the most because of the American Government’s intransigence. Yes. Poor black people.

Imagine if there had been  a hurricane or earthquake in Miami a year ago. By now even the golf courses would have been rebuilt.

We should all be ashamed of ourselves.

Diamond is forever

” These stiffs earn £65K. Wooooo! I’m so scared!!”

Barclays boss, Bob Diamond,  was today “grilled” by the Treasury Select Committee  and once again showed that he is slicker than frozen catshit on wet ice.

He, of course was not the ideal banker to be interviewed on certain topics, especially as Barclays did not source any funds from the British government during the banking crisis. Instead, they borrowed cash primarily from the Qatar Investment Authority (QIA) which was an existing Barclays shareholder.  Barclays had also held talks with  the Libyan Investment Authority and Russia’s VTB and Sberbank banking groups.

At the inquiry Diamond said (quite rightly), “No bank should ever be a burden on the taxpayer.” As someone who had run  Barclays Capital for 14 years, prior to being given the reins to the Barclays Retail operation, he had known where to source money when times became tough for Barclays in 2008.  He’d done it without any UK-focused sentimentality, whereas the rest of the industry ran to the Treasury for handouts. His exact quote: “Banks should be allowed to fail…It’s not okay for taxpayers to have to bail out banks.”

He was quite right. If a bank failed, it would be bought by another bank. Hopefully one with a competent Board and management.

Inevitably, that old chestnut, the banker bonus  reared its ugly head during rather tense exchanges but realistically, Diamond knows that he can earn what he damn-well pleases. Perhaps he wasn’t the ideal banker to defend bonuses. He has foregone his bonus for the last two years but there is little doubt that he can easily afford to do so. In 2007, he earned £21 million.

Barclays is not a government charity basket-case,  unlike the Royal Bank of Scotland whose CEO, Stephen Hester is set for a £2.5 million bonus. (As the government owns 83% of RBS shares, that will, in effect make Hester the UK’s highest paid Civil Servant).

Diamond expressed his belief in the Retail-Investment banking model, saying that the arrangement provided stability and was a “great starting position”. Many MPs believe that banks should be broken up  so that a clear distinction can be drawn between Retail (personal banking) and Investment (so-called Casino banking). In reality, they have always been separate operations and really only come together for accounting purposes.

It has taken the government a long time to come to the conclusion that they are totally impotent as far as banker bonuses are concerned and that they have effectively been told by the banks to “butt-out“.  As a concession though, the banks are expected to say that they are committed to lend more to small businesses. It remains to be seen whether this happens.

The banking industry claims that it is lending, whereas the business sector says that banks are not lending enough and when they do lend, it is at exorbitant interest rates with  borrowers having to jump through a series of bank-designed fiery hoops before banks do deign to lend.

However, Diamond said that demand for commercial loans had subsided.

Once again, Diamond demonstrated that our MPs, who are a motley crew of ex-lawyers, academics, union men and local councillors are no match for the denizens which swim the murky waters of the world’s banking system

PREVIOUS BOB DIAMOND

CHANCELLOR GEORGE OSBORNE’S VIEW ON BONUSES? BUSINESS AS USUAL

Vince Cable

Have you noticed how quiet Vince Cable is these days? He used to be the most vocal politician on the subject of both “Casino Banking” and the banker bonus. It seems that after being told never again to crap in the Coalition’s cosy little nest, he has had his wrist slapped and been muzzled.

Blood Diamond.

“WTF?”

I am not a great fan of the banking industry but the reaction of the terminally ignorant to the appointment of the extremely talented Bob Diamond as Chief Executive of Barclays is  well…….annoying.

If an executive has been branded as the “unacceptable face of banking” by Peter “unacceptable face of politics” Mandelson, we should embrace, hug and welcome him.

Bob Diamond has just been appointed chief executive of the retail arm of Barclays Bank. Even our old favourite, Vince Cable – who himself has morphed from our favourite Opposition spokesman to Homer Simpson’s grumpy father has expressed unease at Bob’s appointment.

Since the phrase “Casino Banking” was coined, it seems that management, administrative and motivational skills have taken a back seat to name-calling,  politicians’ prejudices and sloganism.

Let’s get one thing straight – Barclays Bank belongs to its shareholders – (Bob Diamond has £65 millions’-worth of Barclay’s shares) and it is up to the shareholders to decide who runs the business on their behalf. Not a has-been grubby politician such as Mandelson who has spent his entire political life aspiring to be all the things that Diamond is and he isn’t.

As I have said many times before, banking used to be a business populated by uneducated functionaries with the imagination of  retarded isopod.  The revolution came in the mid-80s when a new breed of executive landed on Planet Bank. The MBA generation. They were (and still are) men and women who know their way around a balance sheet and are trained to run a business which makes money. They are what are called “Drivers”. They drive a business forward but in doing so, they do not take prisoners and they most definitely shoot the wounded.

By definition, they would make lousy Social Workers and rarely or never go into politics because they are far too clever. Good business executives rarely enter politics because they are too bright. Even Asda’s Archie Norman only lasted a few years at Westminster before realising that he was out of everyone’s league.

It is too late to whinge because the revolution has already taken place. Deal with it.  Starting in the 80s, the pipe-smoking old duffers with double-barrelled surnames who ran the banks quickly became an endangered species. Now (thankfully) they are almost extinct.

The so-called “old school” banker is dead.

Eddy Weatherhill, the former shopfitter and well known “bank victim” who is chairman of the self-established Banking Advisory Group has said  (referring to Bob Diamond’s appointment) that “the lunatics are taking over the asylum.” Mind you, he is always ready with a pre-prepared quote since he tried (and failed) to sue Lloyds Bank for £1million.

Vince Cable, the (Business Secretary) has dutifully been trotting out tired and worn-out phrases from his lexicon of banker insults as have many other politicians who themselves could not run a sweet shop.

So who is Bob Diamond? He has many attributes which we Brits do not appreciate but which many envy. He is American, he’s clever (Connecticut MBA), he has had an exceptionally successful career in the finance industry, he is rich (£100 million in the bank) and he has a very happy family life and most important of all, he is an excellent golfer (8 handicap).

Bitter  British politicians have presented Bob Diamond as some sort of dodgy American snake-oil salesman and not the cerebral corporate entrepreneur that he undoubtedly is.

He has a reputation as a great manager and motivator of Barclays most important asset – its people.

I have spent much of my professional life in banking and have met several Diamond-types. They are the management equivalent of a roller-coaster. Sometimes terrifying but ALWAYS exhilarating and if you do your job, they are the most generous bosses that you could ever work for.

Twenty-odd years ago, when I was  Citibanker, I had the pleasure of meeting Bob Selander. He had been assigned to a small area within Citibank – EMEA – Europe , Middle East and Africa.  He was responsible for retail banking , Diners Club and insurance.

What did he know about British insurance? Nothing. What did he know about another Citibank acquisition, Scrimgeour Vickers which was a tired old stockbroking company operating out of a condemned building in the City. Nothing. There were many other aspects of his job that he had no experience of – and that is the whole point!

Firstly NO-ONE is ever really ready for that next promotion and secondly, if you are a good manager and leader, the actual product that your business is distributing is irrelevant. Whether it is pink teddy  bears or retail banking, the management skills that you need are   identical. Don’t let any ex-councillor, ex-barrister, ex-lecturer or ex-shopfitter Member of Parliament tell you otherwise.

Bob Diamond will do well. He’s a member of a very small and exclusive club of corporate leaders that SHOULD be running  a modern  bank. (We’ve had cheap British imitations of this rare breed but where are they now? All that  they have left is an exceedingly large pension and a knighthood).