The oxen will be gored at Barclays

O'Neill will do what is necessary to improve results

IT WAS 1944, the Battle of the Bulge, and as the Allies and Germans took and re-took a bloodily contested Belgian village, the two armies would set up their HQs in the same house - a substantial one on the town square with a commanding view of the countryside.

"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.

News
people'It can last and it's terrifying'
Sport
Danny Welbeck's Manchester United future is in doubt
footballGunners confirm signing from Manchester United
Sport
footballStriker has moved on loan for the remainder of the season
News
people Emma Watson addresses celebrity nude photo leak
PROMOTED VIDEO
Sport
footballFeaturing Bart Simpson
News
Katie Hopkins appearing on 'This Morning' after she purposefully put on 4 stone.
peopleKatie Hopkins breaks down in tears over weight gain challenge
Arts and Entertainment
Olivia Colman topped the list of the 30 most influential females in broadcasting
tv
News
Kelly Brook
peopleA spokesperson said the support group was 'extremely disappointed'
Life and Style
techIf those brochure kitchens look a little too perfect to be true, well, that’s probably because they are
Sport
Andy Murray celebrates a shot while playing Jo-Wilfried Tsonga
TennisWin sets up blockbuster US Open quarter-final against Djokovic
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
Hare’s a riddle: Kit Williams with the treasure linked to Masquerade
booksRiddling trilogy could net you $3m
Arts and Entertainment
Alex Kapranos of Franz Ferdinand performs live
music Pro-independence show to take place four days before vote
News
news Video - hailed as 'most original' since Benedict Cumberbatch's
News
i100
Life and Style
The longer David Sedaris had his Fitbit, the further afield his walks took him through the West Sussex countryside
lifeDavid Sedaris: What I learnt from my fitness tracker about the world
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Planning Manager (Training, Learning and Development) - London

£35000 - £38000 per annum + benefits: Ashdown Group: A highly successful, glob...

Business Anaylst

£60000 - £75000 per annum + BONUS + BENEFITS: Harrington Starr: Business Anal...

SQL Implementation Consultant (VB,C#, SQL, Java, Eclipse, integ

£40000 - £50000 per annum + benefits+bonus+package: Harrington Starr: SQL Impl...

Head of IT (Windows, Server, VMware, SAN, Fidessa, Equities)

£85000 per annum: Harrington Starr: Head of IT (Windows, Server, VMware, SAN, ...

Day In a Page

'I’ll tell you what I would not serve - lamb and potatoes': US ambassador hits out at stodgy British food served at diplomatic dinners

'I’ll tell you what I would not serve - lamb and potatoes'

US ambassador hits out at stodgy British food
Radio Times female powerlist: A 'revolution' in TV gender roles

A 'revolution' in TV gender roles

Inside the Radio Times female powerlist
Endgame: James Frey's literary treasure hunt

James Frey's literary treasure hunt

Riddling trilogy could net you $3m
Fitbit: Because the tingle feels so good

Fitbit: Because the tingle feels so good

What David Sedaris learnt about the world from his fitness tracker
Saudis risk new Muslim division with proposal to move Mohamed’s tomb

Saudis risk new Muslim division with proposal to move Mohamed’s tomb

Second-holiest site in Islam attracts millions of pilgrims each year
Alexander Fury: The designer names to look for at fashion week this season

The big names to look for this fashion week

This week, designers begin to show their spring 2015 collections in New York
Will Self: 'I like Orwell's writing as much as the next talented mediocrity'

'I like Orwell's writing as much as the next talented mediocrity'

Will Self takes aim at Orwell's rules for writing plain English
Meet Afghanistan's middle-class paint-ballers

Meet Afghanistan's middle-class paint-ballers

Toy guns proving a popular diversion in a country flooded with the real thing
Al Pacino wows Venice

Al Pacino wows Venice

Ham among the brilliance as actor premieres two films at festival
Neil Lawson Baker interview: ‘I’ve gained so much from art. It’s only right to give something back’.

Neil Lawson Baker interview

‘I’ve gained so much from art. It’s only right to give something back’.
The other Mugabe who is lining up for the Zimbabwean presidency

The other Mugabe who is lining up for the Zimbabwean presidency

Wife of President Robert Mugabe appears to have her sights set on succeeding her husband
The model of a gadget launch: Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed

The model for a gadget launch

Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed
Alice Roberts: She's done pretty well, for a boffin without a beard

She's done pretty well, for a boffin without a beard

Alice Roberts talks about her new book on evolution - and why her early TV work drew flak from (mostly male) colleagues
Get well soon, Joan Rivers - an inspiration, whether she likes it or not

Get well soon, Joan Rivers

She is awful. But she's also wonderful, not in spite of but because of the fact she's forever saying appalling things, argues Ellen E Jones
Doctor Who Into the Dalek review: A classic sci-fi adventure with all the spectacle of a blockbuster

A fresh take on an old foe

Doctor Who Into the Dalek more than compensated for last week's nonsensical offering