"When the Germans occupied the house, my mother translated for them," says Mike O'Neill, the new chief executive of Barclays Bank. "When the Allies did, she translated for them. That's how she and my father met."
Mrs O'Neill's story is instantly recognisable to European ears - a classic tale of assuming the plumage, fudging whatever needs to be fudged, to survive. As Barclays' new boss tells it, however, it sounds like a Hollywood war romance - Gary Cooper as the young GI from California; Jean Simmons as the spirited Belgian lady upholding cultivated values in the face of slaughter.
Barclays has played up Mr O'Neill's cosmopolitan background. It has pointed reporters to the fact that Mr O'Neill has spent more of his life, nine years, in London than anywhere else. Nevertheless, the American imprint on the Vietnam veteran remains the key to understanding what is now likely to happen to the bank.
Reacting happily to the news of O'Neill's appointment - on Thursday the bank's shares shot up 5.5 per cent to pounds 14.20 - the City has focused on big picture questions. Will O'Neill merge Barclays with the Halifax or the Pru? Will he line it up with a continental European - even Belgian - bank in the face of the euro? Analysts like it that Barclays' new boss was a key figure during the takeover of his previous employer, the San Francisco-based Bank of America, by the North Carolina-based NationsBank.
Or will O'Neill merge Barclays with a US institution? The more literal- minded in the City say that because O'Neill is American it is only a matter of time.
But O'Neill and Sir Peter Middleton - due to step up from acting chief executive to chairman of Barclays on March 26 when O'Neill takes the top executive slot - all but rule out such drama in the next several years.
Instead, O'Neill talks about stopping Barclays run of reverses - losses in Russia, exposure to the paraplegic hedge fund LTCM, the abrupt and unseemly departure of his predecessor, Martin Taylor - by going back to basics. "Executing on the bank's existing strategy, not pursuing a vision, " is the way he puts it.
O'Neill comes across, not as an American patriot, but as a disillusioned, hardened American idealist. For example, he explains why he has led such a peripatetic life this way: "My father was so inspired by John F Kennedy's 1960 inaugural address - 'Ask not what your country can do for you; ask what you can do for your country' - he gave up his job as an assistant professor at the University of Missouri to go to work for the US Agency for International Development. So we moved around - Cambodia. Afghanistan. Then I came back to Washington to finish school."
So why didn't he follow in his father's footsteps - become a teacher or civil servant? "Oh," he says, "after a while that Kennedy stuff wore pretty thin. My father went into business."
Business, in O'Neill's world view, emerges as a brutally tough competitive war zone, but also as a refuge for honourable men. Numbers don't lie. Performance can be rated. A chief executive goes to a board, suggests a course of action, lays out his reasons and his assessment of the consequences for not following this course.
Instituting this corporate culture at Barclays - stamping out any vestige of European fudge - is his first priority, O'Neill says. Such clarity will lead to an improvement in Barclays' results, he promises.
On Tuesday, Barclays is expected to report pre-tax profits of just under pounds 1.9bn for 1998, 10 per cent up on 1997, according to analysts. But this figure is almost unchanged from the level reached in 1994. "Profits before bad debts are expected to be 7 per cent lower than the level in 1993," the US firm Salomon Smith Barney notes. O'Neill's coda for improving on this sideways drift in Barclays' financial performance goes like this: "The information to understand the position a business is in is almost always out there.
"The difference between successful and unsuccessful businesses is in acting on that information. If you act, someone's ox gets gored. No one likes it. But you go in and explain your reasons for acting, and the consequences for not acting."
As he lays out what can ultimately be described as a battle plan for taking up his new job, Sir Peter Middleton, sitting beside him, murmurs his assent. A smooth but razor sharp former Treasury mandarin, Sir Peter's style could hardly differ more from that of his new partner at the top of Barclays.
Sir Peter gives nothing away about his sense of the battles to come as the 53-year-old American puritan confronts the wily European survivors on Barclays board and further down in its ranks. He says only that descriptions of turbulence inside Barclays are much exaggerated and makes a joke about his capacity to line up the board behind O'Neill.
"Heavens," he says, "I've worked with chancellors and prime ministers. I'm sure that I can work with the directors of a bank."
Following are excerpts of O'Neill's tough but straight-talking remarks from an interview conducted on Friday morning:
Q: How are you going to build shareholder value?
A: I don't know. I can tell you it's what I'll be focusing on.
Q: How did you build shareholder value when you were number two at Bank of America?
A: What we did was assess where businesses had value. Not just at aggregate level. But by going deeper and deeper. We kept cascading down and would discover, for example, that where a department with three products was doing well, it might be that only one was generating any value. The key to this is having good management reporting systems.
Q: What are you going to do about Barclays Capital [the investment bank left after BZW was sold, and which is expected to report a loss of more than pounds 300m in 1998 after profits of pounds 159m in the first half of last year]?
A: Understand it. Understand where value is being created in it. Understand the linkages between Barclays Capital and the other parts of the bank.
Q: What are you going to do about the consolidation of the banking sector in the UK and Europe?
A: Compared to the US, a lot of it has already been done.
Q: But what about cross-border consolidation in Europe on the back of the single currency?
A: I need to get refreshed on European retail banking. Sir Peter would be better placed to answer that.
Sir Peter: : The euro means cross-border consolidation, yes. But the consolidation will take time. The differences between banking in different European countries are still greater than the similarities.
O'Neill: I'm more concerned about competition from new entrants to banking. New firms specialising in credit cards. New firms specialising in mortgages. In the US, the mono-card businesses have always stayed one step ahead of the banks. First, they picked off the most creditworthy customers. Then they developed affinity marketing - cards for red setter owners in Wisconsin where a few pennies of each purchase went to the Wisconsin red setters club. Now more of the same - cards for red setter owners just in one town in Wisconsin.
Q: Why have Barclays' costs stayed higher than those of its direct competitors, NatWest, Lloyds?
A: I don't know yet. But being efficient is critical to creating value.
Sir Peter: : I see our [comparatively high] cost base as an opportunity.
Q: Only if you do something now you haven't been doing so far, to bring it down?
A: Yes, a more disciplined approach. . .
Q: The generality is that Barclays' board is at odds and that different parts of the bank are pulling in different directions. What are you going to do about that?
A: The way I plan to work with the board is to put the facts on the table and the consequences [of not facing these facts]. Not to come to the board in an episodic or ill-prepared way. It is essential when someone's ox is being gored that you explain why this is necessary.Reuse content