City: Fiery baptism

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The Independent Online
ANYONE WHO took Barclays Bank at its word when it insisted there was no boardroom split or row over the appointment of Andrew Buxton as chairman and chief executive, should think on this. About the middle of last month an extremely curt memo was circulated at head office to the effect that, in future, Sir John Quinton, then still chairman of the bank, would be unable to receive any more messages on the bank's electronic mailing system because he had been struck off the list. The memo did not explain why, and it is no doubt possible that there was some perfectly innocent reason for it. That is not the way many Barclays executives saw it, however. They took it as evidence of a serious rift at the top in the dying days of Sir John's regime. At about the same time, Sir John was also observed forlornly travelling to the office by tube, apparently devoid of the chauffeur-driven car in which he normally gets around. Again, it is possible that this was out of choice, but staff drew their own very different conclusions.

If Sir John was being deliberately ostracised in his last few weeks at the bank, the cause would appear to have been an interview he gave to European Banker magazine, in which he was highly critical of Barclays' management of its property lending in the late 1980s. By implication, he was also critical of Mr Buxton, who was managing director at the time. Sir John said that guidelines agreed with Mr Buxton on property lending were breached because of a breakdown in communications between head office and the regions. The bank's exposure to commercial property continued to grow even after Sir John had put a 'cap' on all further lending to the sector.

Such candour, even for an outgoing chairman, is remarkable enough, but against the backdrop of controversy surrounding Mr Buxton's appointment, it was absolute dynamite. To his credit, Sir John took much of the blame for the disasters that have befallen Barclays, but he also dumped Mr Buxton firmly in it. Given the unease being expressed in the City over the decision to allow Mr Buxton to take on the combined role of chairman and chief executive, his remarks seemed deliberately timed. The memo was something else, however. To staff, it looked petty-minded in the extreme.

Despite institutional protest, Mr Buxton has taken up his new position. He promises some form of split at some unspecified date in the future, but it is also clear he fully intends to hang on to the position of chairman with a powerful executive influence. He has been lucky to get away with it. Barclays has squandered its shareholders' money in spectacular fashion over the past three or four years, culminating last month in the pounds 240m Imry write-off. Only part of the blame for this lies with the recession.

Institutional shareholders wanted the roles split with, perhaps, Mr Buxton taking the chief executive's post and a suitably grey-haired elder statesman becoming non-executive chairman - something similar to the Sir Jeremy Morse/Brian Pitman partnership that has been so successful at Lloyds. But it was not to be. The Barclays board remained immune to pressure and stuck by its original decision. Mr Buxton has won the battle; whether the prize he has carried off is all that enviable is another matter.

His is to be a baptism of fire. Judging by the latest company failure figures from Dun & Bradstreet, the business information company, there is a lot more pain to come in the banking sector before things start to improve. Last year, company failures in Britain rose a staggering 31 per cent, with worse forecast for 1993. The rate of increase does seem to be slowing, but this is scant consolation to the likes of Barclays, which will have to continue providing at an extremely heavy level for its exposure to the small business sector.

The best Mr Buxton can look forward to in 1993 is another year of undiluted controversy. As he must be only too aware, if you play for the big time, you pay double the price for failure. One more foul-up by Barclays and he will be out of the door so fast he won't have time to pack his belongings.

One curious irony in all this. Amid all the controversy over Mr Buxton's elevated dual role, Tony Greener has slipped quietly into exactly the same position at Guinness, without a murmur of institutional protest. The difference? Under Mr Greener's predecessor, Sir Anthony Tennant (who also combined the two roles), Guinness performed spectacularly well for shareholders. Barclays has not.

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