‘Anyone asking me for PR advice would need their head examined’
by Robert Armstrong
When I arrive at the Smith and Wollensky grill, barroom of the midtown Manhattan temple of grilled meat and red wine, Bob Diamond is in warm conversation with the manager. I wait as they catch up. Diamond notices me and extends his hand, and soon I am in one of those cocoons of hearty masculine bonhomie indigenous to steakhouses. Diamond has me firmly by the hand, the maitre d’ has his hand on my shoulder.
Jokes are made. What scoundrels we are. We laugh. To a spectator, it could have been a scene from the boom times of investment banking: middle-aged men in suits, about to celebrate their good fortune over a lavish meal.
Diamond is wearing a lime-green tie with little white tennis racquets. His default expression is a slightly toothy grin, his eyes wide behind rimless spectacles. He has the pink, healthy, energetic air of a headteacher — his father’s profession — who spends his afternoons on the playing fields.
But of course he is far from this. The one-time head of Barclays’ investment banking division and then chief executive, he rose to and fell from the pinnacle of British and indeed global banking. In the process he became, for the British press and politicians, the face of “casino” capitalism.
At our table opposite the long bar, Diamond sits down directly in front of a large bronze sculpture of a bull rearing its head. Sometimes my job does itself.
We are both Bostonians, I begin. He gets in a question first: what neighbourhood? I confess to Beacon Hill, the brick and cobblestone haunt of the city’s Wasps. Diamond grew up in a middle-class family in the suburbs, one of nine siblings.
A headline passes through my mind: downwardly mobile journalist interviews self-made mogul. Diamond spent much of his career as an outsider — striver among the privileged, a bond trader among investment bankers, and an American among Brits.
Sports do their trick, though. Soon we are revelling in schadenfreude — two Bostonians living in New York at a time when the local teams can’t seem to win and the Boston teams can’t seem to lose. “These Yankee fans that have been killing me for years,” he grins, “they’re absolutely apoplectic!”
A waiter appears. Are we drinking, I ask? Diamond opts for fizzy water. I order a glass of pinot noir. For me, the meat on the menu is how, six years after he was turfed out of Barclays amid the Libor fixing scandal, and 10 years after the great crisis, Diamond sees his place in financial history. Does he have regrets? First we turn to his current ventures — rather a comedown, I suggest, for an erstwhile master of the universe.
He does not see it that way. After being fired from Barclays in 2012 Diamond quickly grew bored of retirement. The following year he founded two ventures — Atlas Merchant Capital, which invests in financial services companies in the US and Europe, and Atlas Mara, which does the same across sub-Saharan Africa. Doing deals in the mere hundreds of millions is a long way from running a bank with a £1.6tn balance sheet, I would have thought. But here I gain a glimpse of why Diamond was labelled the “Bobtimist” early in his career. He brims with purpose.
I ask whether a common thread unites the apparent grab-bag of investments at Atlas Merchant Capital, from a mid-sized French broker to an American insurance company annuity portfolio? Simple, he says. After the crisis, he argues, regulators’ insistence that banks hold so many layers of extra capital, and follow so many new rules, creates an opportunity for non-banks to take up the business that has become unprofitable for banks. Today, no politician “will ever allow too-big-to-fail, or government money on their watch to have to go in and bail out a bank.”
There is an irony in this. In 2012, Diamond lost his job at Barclays when the Bank of England governor Mervyn King intervened, having concluded with other regulators that Diamond did not understand that finance had to change. Now Diamond has started a business that, apparently, is based on the premise that the regulators have gone too far. So does he think the authorities over-reached after the crisis? To my surprise, he says no. How can one say the regulators have it wrong, he asks, when today RBS is still 60 per cent owned by the UK government? This is a pointed comment, of course: Barclays and HSBC were the only major UK banks that did not take government money in the crisis.
201 E 49th Street, New York, NY, 10017
Creamed spinach $12.50
Mashed potato $13.00
Espresso x 2 $11.50
Total (incl tax) $104.52
The then prime minister Gordon Brown recently wrote that Barclays proposed bidding for RBS in October 2008 — having already bought Lehman Brothers’ US business. History has made clear that such a deal would have doomed Barclays to nationalisation. Never happened, Diamond says. “I have a lot of respect for the former prime minister but I don’t know where he got that from.” Whitehall insiders have insisted to the FT that the story is true, but I let it go — not least as I am a bit distracted by hunger. Our orders have not yet been taken. I eye the menu: rib-eye steak, shrimp cocktail, lobster salad.
We turn to the Middle East. As someone who has done business in the region, does he think the Khashoggi affair will change the business climate between the Gulf and the west? He offers generalities. I note the recent news that Barclays will not face charges in the Serious Fraud Office’s investigation of alleged kickbacks paid when Barclays raised £6.1bn from Qatari investors in 2008.
Here, for once, the gates come down and the smile disappears. He wasn’t chief executive then, and can’t comment on a live legal matter (Diamond’s former boss, John Varley, and other executives still face charges).
We move south. Africa, he says, is a personal passion and Atlas Mara is “about doing good and doing well”. It is possible his expansive framing of the venture has something to do with the fact the shares in the venture are down 85 per cent, and falling, since they were floated in 2013. The Bobtimist is unperturbed: he “knew from the beginning this is a 10-year play”.
At last, the waiter comes for our order. Diamond has the cheeseburger, no bun — “best cheeseburger in the world” — coleslaw instead of fries. To each his own, I think, choosing a sirloin steak, mashed potatoes and creamed spinach. In a noble gesture I decline a second glass of wine.
I ask if Diamond’s Americanness caused him any problems in running a major British institution. His airy comment in parliament, the year before his ousting, that the time for “remorse and apology” by banks “needs to be over” infuriated politicians and commentators and underlined his reputation as an embodiment of unfettered American capitalism. No problems at all, he insists. He was brought to the UK by Barclays to impart a new culture to the place: the culture of global investment banking. I had been thinking of something different entirely — brash Yank vs buttoned-up British establishment — but Diamond is soon on a roll.
When he arrived to run Barclays’ investment bank in 1996, after 13 years at Morgan Stanley and four at Credit Suisse, the division was operating only in the UK and was unprofitable. He changed that. “For 12 years we gave 20 per cent compound annual profit growth, never a quarter of losses, really successful business; we moved into the top two or three in the world in foreign exchange . . . ” He has given this speech before.
There is another side to this story, I put to him. Barclays shares have been flat since 2009; the investment bank that Diamond built when times were good has withered when times were bad, falling to seventh in the industry league tables. Did he build a sandcastle that disappeared with the receding tide?
“I think that’s a great question — and you are so wrong!” he beams. “I love it. If you think that’s a hard question we’re going to have a good lunch.”
He lays out his view of what happened to Barclays after he left in 2012, having served as chief executive for just a year and a half. One: the UK decided to impose ringfencing, separating investment and retail banking and putting Barclays at a disadvantage against its US peers. Two: the UK introduced a bank levy, charged on global balance sheets. Three: the Barclays board picked “the wrong person”, Antony Jenkins, who built his career in credit cards, to succeed him. Jenkins “did not support the investment bank”, driving much of the US talent brought in with the 2008 acquisition of Lehman out the door. (Jenkins was fired three years later.)
Despite all this, he says, Barclays is still “the only investment bank outside of the six US investment banks that’s competitive; not Deutsche, not the Swiss, not the French.” He is impressed with the leadership of Jes Staley, the fellow American and investment banker who succeeded Jenkins in 2015. The bank is undervalued and will make a comeback. If Barclays were ever to spin off the former Lehman business — very unlikely indeed, he thinks — “Atlas Merchant Capital would be right there”.
Our food arrives. My steak is beautifully charred and the potatoes glisten with butter. The restaurant has forgotten to leave off Diamond’s bun. He carefully sets it aside. This is clearly Diamond’s place. A waiter serving another table comes over to shake hands and say hello. A bartender, coming in for his shift, stops to chat, telling Diamond that a mutual friend has passed away. Diamond makes a note of it in a little notebook. At the end of the meal, the restaurant insists on defying Lunch with the FT rules, and pays for my wine.
As we eat, we turn to July 2012, when Barclays decided to come out ahead of the industry in announcing a settlement of Libor rate rigging, paying £290m in fines. The public response to the news that bankers were manipulating this fundamental interest rate was explosive. Within a week Diamond was out of a job — “I made a decision to step down; you can call it firing; it’s all the same”.
A recent book about Barclays, The Bank That Lived A Little, by the former investment banker, Philip Augar, describes a brutal firing. Informed by King that Diamond had no support from the regulators, the Barclays board asked him to go. (Diamond says he liked the book, but that it gets some things wrong — declining to specify what.) The intervening years have not changed his view of what happened. Yes, individuals acted reprehensibly at Barclays, but “our fines were lowest in the industry; it was an industry issue; I would argue that other [banks] were more involved”. He had no knowledge of the rigging but accepted accountability “as a CEO should”. But, he says, there’s no question that the regulators “were aware of it and had been for years; it’s documented, it’s factual”. (It has been widely reported that the bankers had been warning UK regulators about Libor since 2007, years before investigations began.)
Further, Barclays had a deal with its supervisors about the process: “We would settle first and that would propel the process” with other banks. It didn’t play out that way: “To say that some didn’t uphold their end would be an understatement.” When the settlement came out and public anger exploded, “the regulators immediately turned and attacked”.
“Oh, it was horrible,” he says when I ask how it all felt. “I’ve never had to manage something more challenging for my family, my friends, my integrity, for all those things — and it was unnecessary.” But he bats away the idea that being the first bank to settle was a mistake on the part of the board (“hindsight’s hindsight”), and he insists he is not angry now.
But it was simply wrong for Barclays, and himself, to be singled out. He acknowledges “legitimate anger against banks, bankers and regulators”, and says he could have had a better sense of the public mood. But exactly what he thinks he missed is striking: “People in the UK were mad at banks and at bankers and they were not differentiating between who operated well and who didn’t operate well and I missed that, I missed it completely.”
I am not convinced that, if only the public had understood how profitable Barclays was, there would have been less anger over Libor. Diamond’s Labrador-like optimism and confidence in his choices are appealing and feel genuine. But a maddening pattern is emerging, where he gives the same answer to any question about his years at Barclays: I was hired to build a great, profitable investment bank, and that’s what I did.
I make one more attempt to introduce a wider perspective. I point out that he became a symbol of the huge inequalities that define our society, of unbridled capitalism. Does he worry about that?
Diamond recalls how the then UK business secretary, Lord Mandelson, in 2010 branded him “the unacceptable face of banking”. Diamond called Mandelson and asked him why he said it. Mandelson, he says, replied that it was good politics. But when Diamond brought him into the bank and explained the key role it played in the UK economy, Mandelson apparently changed his mind. Again: the question was about inequality, the answer was about a really good, productive business, “a real success story” where “the people who were rewarded for that deserved to be rewarded”.
My steak has been delicious. I don’t ask Diamond about dessert. I can guess the answer. We each have an espresso. I ask, as we sip, his advice to other bank bosses in the regulators’ cross hairs, such as Wells Fargo’s Tim Sloan?
After some thought, he offers that “you go to first principles, you focus on talent, you focus on execution, you have good teams”. There is a pause. “But I think anyone who would ask me for public relations advice would need their head examined.” The answer sticks with me: it is the only time in our lunch that this man of oceanic ambition, tireless builder of businesses and advocate for his own achievements admits that he may — just once — have put a foot wrong.
The writer is the FT’s US finance editor