The second coming of Bob Diamond
The former Barclays boss likes to present himself as just a regular guy – but he has no intention of riding quietly into the sunset
After months of self-imposed exile the man who was once Britain’s most controversial banker has resurfaced, breaking cover for the first time with a big set-piece interview in The New York Times. But is it the show of contrition his critics would like to see, or more of the self-justification he’s become infamous for on this side of the pond?
It’s fair to say that the former is not much in evidence. In the interview Diamond tries to play the Uriah Heep card, adopting the obsequious humility of Dickens’ moneylender. He insists: “I never did anything for money. I never set money as a goal. It was a result. And if you look at how Jennifer [his wife] and I and our three kids have lived our lives, as soon as we had any money at all, we created a family foundation”.
He spins a tail of a middle-class kid who’d intended to become a teacher and had only taken a first job in business – at a medical company – to raise funds for a PhD. That led to an offer from Morgan Stanley, where his former boss had been hired to set up a computer system. From then he was on his way, though he claims he was embarrassed to admit at the time that he’d never heard of the Wall Street titan.
The “just a regular guy” schtick is scarcely credible today. An attempt is made to reinforce it with the photo that goes with the article – he’s pictured riding the New York subway, in a multi-racial and predominantly youthful crowd.
It’s a strange image. He can’t help but look a bit out of place. The fashionable African-American kid standing next to him staring moodily into the middle distance could easily be a model and the picture looks oddly forced.
In the interview Diamond continues the theme: “[My only car] is an 11-year-old Jeep on Nantucket. I think Jennifer and I have always had a great home for our kids. We really like to take vacations with them, so those are good. But we don’t have a boat, we don’t have fancy cars. I think we have lived well, but it hasn’t been about accumulation or anything like that.”
The man chosen to do the interview – and it will probably be the only one for now – is Andrew Ross Sorkin, whose Too Big to Fail has become the definitive account of the financial crisis.
Although he gives his subject a fairly easy ride – one London PR man summed it up by saying “If I was him [Diamond] I would have been pretty pleased with that” – even he finds that one a bit hard to swallow. Sorkin points out that in London, Diamond bought and sold an enormous town house with an indoor swimming pool. He now has homes on Nantucket, Massachusetts, which Forbes magazine cites as having some of the highest house prices in the US, as well as in Beaver Creek, Colorado, a ski resort that was once part of a winter Olympics bid.
But his main pad is a $37m (£24m) penthouse apartment on the 40th floor of 15 Central Park West. Neighbours include Sting and the Goldman Sachs chief executive, Lloyd Blankfein. The purchase was made through a company bearing the name of Novgorod, a historic Russian City, making it look as if an oligarch had been the buyer.
What’s more, the combative Diamond of old is clearly still in there, with a volley against his nemesis, Sir Mervyn King, the Governor of the Bank of England, who engineered his dismissal after the Libor interest-rate fixing scandal broke. In the interview Diamond says: “My first reaction, which is still my reaction today, is: He doesn’t have the authority to do that!”
He ultimately decided that to “step aside and shut up” would be the “best thing” he could do for the firm after a meeting in his kitchen with its then chairman, Marcus Agius, and another director. His chief lieutenant, Jerry del Missier, swiftly followed; and last month the final member of the powerful North American triumvirate at the top of the bank – Rich Ricci – “retired” along with another key Diamond ally, Tom Kalaris.
Sir Mervyn’s intervention – he told Agius that Diamond had lost the confidence of his regulators – is still controversial in banking circles, and not just among Americans.
There are plenty of London bankers who believe that Diamond was harshly treated over the Libor affair. Although letters between Lord Turner, the former chairman of the Financial Services Authority, and Agius show that relations between the regulator and Barclays had become strained to breaking point, no authority has ever found any wrongdoing on the part of Diamond. Nor even suggested it.
In the conversation with Sorkin, Diamond says of some of the lurid emails between traders that came to light as a result of the Libor investigation: “I got physically sick, and I couldn’t believe some of the phone conversations that were happening between traders.” He adds: “Do you want the truth? Up until all of this, I didn’t even know the mechanics of how Libor was set. If you asked me who at Barclays submitted the rate every day, I wouldn’t be able to tell you.”
But even had Sir Mervyn not intervened – even had Diamond not been made a “scapegoat” – the writing might have been on the wall.
What Sorkin doesn’t say is that the Barclays board was becoming increasingly restive, not least because the issue of Diamond’s remuneration was throwing a harsh spotlight on its non-executive directors. Diamond had become a lightning rod for criticism of the bank, a source of continuing controversy, the “unacceptable face of banking”.
He admits to Sorkin that he might have been “tone deaf” to the “American thing” and that he had perhaps underestimated the backlash against banks and bankers among his British hosts – even though Barclays, unlike Lloyds and Royal Bank of Scotland, had managed to evade a state bailout.
However, that may be partly down to luck – a significant contributing factor to the failure of RBS was its trumping of Barclays’ bid to buy ABN Amro. While RBS paid cash, rather than shares as Barclays would have paid, and the best parts of ABN were sold to Santander, Barclays might still have required help had it won.
Even without ABN it was short of capital during the crisis and its method of avoiding a bailout – through securing an investment of petro dollars from the Middle East – is steeped in controversy and is the subject of an investigation by the Serious Fraud Office.
But that’s now in the past. What’s in the future for Diamond? He has been jetting around the world, floating an idea for a merchant bank that will take stakes in companies in Europe and especially Africa. He sees the latter as the world’s next big economic growth story; Barclays invested heavily in the continent during his tenure. In the meantime he has been lecturing at Yale and sitting on the board of the Barclays Center, the home of the Brooklyn Nets basketball team.
Although he clearly hankers after the trappings of his former role to some degree – he tells Sorkin that he misses flunkies sidling up to say “How can I help?” when he looks cross – he calls his new life “liberating”.
And he may have flunkies aplenty before too long. Because what the New York Times interview shows is that Bob Diamond has no intention of disappearing into obscurity as his deputy Jerry del Missier has largely done. The publication was clearly intended to send a message out: Bob Diamond is back, whether those pestilential Brits like it or not.
What they said about Bob
“The first step towards a new culture of responsibility in British banking.”
Chancellor George Osborne on Bob Diamond’s resignation
“I think his resignation letter is drafted with an eye to that [pay-off], because he admits no guilt on his part at all.” Former City minister
“The unacceptable face of banking.”
“No one in the world I admire more than my dad. 16 yrs building Barclays. Shame to see the mistakes of few tarnish the hard work of so many.”
Mr Diamond’s daughter Nell, after telling Messrs Osborne and Miliband to “go ahead and #hmd” in a swiftly deleted tweet
“He and his management team have serious questions to answer.”
Prime Minister David Cameron in the wake of the Libor-fixing scandal
“If he had an ounce of shame he would immediately step down.”
The Financial Times, in a front page leader after the Libor affair
“If Bob Diamond had a scintilla of shame, he would resign. If the Barclays board had an inch of backbone between them, they will sack him.”
Lord Oakeshott, Liberal Democrat peer
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