No obvious successor: The dilemma facing Diamond's City enemies
Saturday 30 June 2012
There were growing signs last night that the City was losing patience with Bob Diamond, the embattled chief executive of Barclays Bank, but analysts said he might survive for some time owing to a lack of credible alternatives.
With MPs calling for his head over the interest-rate scandal, Mr Diamond is seeking support in the Square Mile. Analysts say he should stay for now, not least because there are few obvious candidates to replace him. One of the complaints about the Barclays board is that Mr Diamond was given such a free rein to run the lender that no serious succession plan is in place.
Qualified outsiders would baulk at a job now seen as an even worse poisoned chalice than the one Stephen Hester took on at Royal Bank of Scotland, say observers. One analyst who has been following Barclays for years, said: "There just aren't that many obvious candidates. We've just had a clear-out of disgraced bank CEOs. Do we want another? It would be massively disruptive to have a void, to have Diamond out and then a search for a new guy and then a period of inertia. Also, it is such a poisoned chalice for anyone who already has a good job."
Antony Jenkins, head of the bank's retail arm, is regarded as the only realistic internal candidate, although one City insider said yesterday: "Jenkins was being groomed to run the whole group but he was not seen as a particularly inspiring choice."
A common view is that Mr Diamond's role now is to absorb brickbats before quitting once the worst of the scandal is past. Jane Coffey, head of equities at Royal London, which manages savings of £40bn, said: "I would not be surprised if he goes over time. I would not expect him to resign this weekend."
Ms Coffey called for investigation of what executives at Barclays knew about the manipulation of interest rates. She added: "If indeed it turns out they were instructing traders to do this, that would make [Diamond's] position untenable. He cannot say it did not happen on his watch."
Some City fund managers warned that it was impossible for them to buy shares in Barclays until Mr Diamond goes. The bank's share price has halved in two years from about 330p to just 162p at the close last night. They fell again yesterday after dipping by 16 per cent on Thursday. Investors said that with litigation looming, they could not recommend a purchase of the stock.
Some called for the Barclays chairman, Marcus Agius, to step down in order to protect Mr Diamond. Alan Miller, of SCM Private, said: "Instead of being tempted to do the cowardly thing by sacrificing his own chairman, he should go himself. Only by changing the endemic 'abuse-the-customer' culture embodied at the very top of major banks will anything change. Putting the head of Barclays Capital in charge of the overall bank, conveniently forgetting the risks he took to earn his 'spoils', is like putting the head of a licensed bookies in charge of the Bank of England. Of course he should go."
Large institutions such as Legal & General and Standard Life are staying silent on the issue for now, at least publicly. It is possible they are working behind the scenes to force a change. Pension funds managed by these firms hold billions of pounds of Barclays shares, so the fall in its stock this week will have hurt the retirement funds of millions of Britons.
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