Taylor runs up against a brick wall
Why did the man who pledged to revolutionise UK banking quit when there's so much to be done?
Saturday 28 November 1998
The official version is that Mr Taylor has been wanting to go for quite some while now. He feels he's achieved all he was going to and Mr Taylor is the kind of man who, when he decides to do something, just goes ahead and does it. It hardly needs saying that even if this were to be the truth of the matter, nobody is going to believe it.
Chief executives of major, publicly -quoted companies just don't resign in this manner. The reaction of the share price, which plunged nearly 10 per cent, tells you all you need to know about why. When a chief executive tells his board he wants to go, care is taken to stage manage the departure and prepare an orderly succession. Nor is it usual to pay the chief executive who voluntarily abandons his post "generous compensation", however fastidious he has been up until that point, and however out of touch with reality our boardrooms have become.
It is certainly true that Mr Taylor is a radical free thinker, with a sometimes quite eccentric approach to things. Part of his strength as a business leader is that he refuses to be bound by established practice and ways of doing things. He is a former journalist, after all. And, of course, there is always a first time for everything. But the idea that "there simply is no story", which is what Andrew Buxton, the chairman, told me yesterday, just doesn't stack up.
I think we can safely discount the possibility that Mr Taylor has been involved in an incident with Rastafarians on Clapham Common, or that he has had some sort of mental breakdown, another popular theory in the City yesterday. Nor am I suggesting he has been frogmarched to the door after some ghastly act of wrecklessness or negligence.
But it does seem quite clear that a gap has developed between Mr Taylor and his board; that he has lost the confidence of his fellow directors or at least that he believes he has. In recent months, Mr Taylor found himself frustrated at every turn, and he felt his ability to bring about change at Barclays was ebbing away. There is obviously grief here, some sort of strategy disagreement that underlies it all, and it is silly of Barclays to pretend otherwise.
Mr Taylor has achieved much in his nearly five years with the bank, but things have not gone well for him in the past year. When he first proposed the sale of BZW, he was blocked by the board. Eventually they accepted his case but by then it may have been too late. They blamed him for the subsequent mishandling of the sale, and he blamed them for dragging their feet. Nonetheless, the sale was executed and when I met Mr Taylor last summer, he was in bullish mood.
His job at the bank was only half complete, he told me, and he would only depart once he felt he would not be missed. That point was still a long way off, he insisted. He wanted both to achieve his aim of introducing a real culture of excellence into Barclays' retail banking operation, and he desperately wanted to play a lead role in the big consolidation of UK banking he believes to be just around the corner.
On the sale of BZW, he was unrepentant. It was the best business decision he had ever made, he insisted, for this was a high-risk operation of a type that Barclays shouldn't be involved with. As I left that meeting, I remarked that there were rumours in the City of huge losses at Credit Suisse as a result of its exposure to the developing financial crisis in Russia. He seemed relieved. It was as if he had left all those banking problems behind with the sale of BZW.
Within two months, it had emerged that this was very far from being the case. Barclays became the only UK bank to announce a significant exposure to the Russian bond crisis. Worse, it was forced to participate in the rescue of Long-Term Capital Management, the US hedge fund whose near collapse threatened to throw the world's financial system into chaos. Again, Barclays was the only UK bank with a sizeable trading relationship with and loan exposure to LTCM.
These two occurrences were a huge personal embarrassment for Mr Taylor. Here was a chief executive who had staked his reputation on reducing credit risk at Barclays.
It was a personal crusade and it was partly why he had sold BZW. Despite that, here was a bank that had to admit to involvement in the two most high-profile features of the financial crash. Interestingly, there were few calls from the press for Mr Taylor's head as a result of these misjudgements. This may have been an example of the financial press closing ranks to protect their own, for Mr Taylor's opposite number at National Westminster Bank, Derek Wanless, didn't get the same benefit of the doubt when he was going through a similar rough patch a couple of years back. All the same, this was plainly a watershed of some sort for Mr Taylor.
Was this the turning point at which Mr Taylor stopped getting his way, the critical point he referred to in his meeting with me where he could no longer make a difference?
The board is one thing. At this stage it is only possible to speculate about what core strategy differences came between Mr Taylor and his fellow directors. Was it Mr Taylor's determination to forge a big consolidating merger? Or was it a difference of approach on operational matters?
Whatever the answer, Mr Taylor was meeting a brick wall. There was a difference of style - Mr Taylor, with his penchant for designer clothes and intellectual reflection felt more and more out of place among the grey suits and stuffed shirts - and this was frustrating his ability to act and get things done.
That may have been the case among the ranks too. Mr Taylor has moved his own people into all the key executive positions within the bank, but ultimately a high street clearer such as Barclays is made up of an immovable rock of Captain Mainwaring types, of a deeply conservative army of branch bank managers. This is the backbone of the bank, and it cannot easily be changed. What's more, such people don't take kindly to being pushed around by someone as intellectually charged and radical as Mr Taylor.
So what happens next? Mr Taylor leaves behind him a much stronger bank than the one he inherited, but also a rudderless one with a major public relations mountain to climb, at least as far as its shareholders and the City are concerned.
Just why did Mr Taylor, who promised to change the face of British banking, resign when there is plainly still so much left to be done?
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