September 7th, 2010
09:33 PM GMT
It's hard to know the sub-lead in this announcement after the surprising timing of Bob Diamond moving up from President to CEO of Barclays Bank from next March.
Is it that Diamond finally got the job? Is it that he took the London job even though he's rich, aged 59 and lives happily in New York? Is it that another American is taking the reigns at a top British business (BP, Burberrys, Pearson)?
Even though he lost out to John Varley for the top job six years ago, the older Diamond always seemed to me to be the head of Barclays anyway. You certainly saw him on television a lot more.
Why? Follow the money. Something like 2/3rds of Barclays business comes from his part – investment banking at Barclays Capital (known as Barcap). And as president, he also oversaw commercial banking (companies) and the wealth management (rich individuals). He was even involved in the sports promotion and branding, whether its the Barclays Premiership (he loved handing over the Barclays trophy to his beloved Chelsea) or Barclays promotion of London's new bike initiative.
Diamond didn't have to deal with the more sedate Barclays retail operations in the UK and the credit card. Now he does.
Does Barclays become an investment bank with a retail arm? Or does it stay a big retail bank with lucrative add on?
Barclays said again Tuesday its not going to change its strategy of being a global financial giant just because its now run by an investment banker.
I have yet to hear any critical comments about his appointment. Of course his salary and compensation package was criticized by Peter Mandelson earlier this year when he said Diamond was the "unacceptable face of banking ... " because of his salary and bonuses (the numbers were disputed by the bank) and also his heady purchase of bankrupt Lehman's U.S. investment bank business two years ago at a steal (which has now landed Barclays in the middle of a lawsuit).
Diamond is certainly a high flier. He is certainly very wealthy thanks to his huge success at Barclays and doesn't need to work anymore. And now he is coming back to London where he will have to once again deal with the media and politicians picking over any bonuses he may get in the coming years (he did not take a bonus during the economic crisis).
Add to that, the UK is debating whether London-based universal banks (ie: Barclays, HSBC) should be broken up so the volatile investment banking arm (the 'casino side' as one politician here calls it) does not affect the retail banking arm. While Diamond and Varley kept Barclays away from government handouts during the crisis, critics say the investment bank has profited from getting central bank money at rock bottom interest rates.
Diamond will certainly become be one of the public players in this debate.
As one analyst told me: "He must really want this job".
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