Diamonds are forever

Congratulations to Bob on his appointment to the Chief Executive position at Barclays. Bob Diamond appears to me to be one of the more skilled gamblers in banking and he certainly has done an impressive job. What his appointment will mean for account holders at Barclays time will tell, but at least this is one bank which did not need the government to bail it out thanks to Bob.

There is of course an aspect about Bob’s appointment which shows Barclays and indeed Bob, like the other banks is still up to the same tricks. It is not simply the package he has been given, it is the way the Board justifies it.

Quite correctly the remuneration committee looked at what executives at other banks get paid and used that to benchmark Bob’s package. Normally when I look at offering someone a package I try to stay in the middle of the range. Not so for bankers and certainly not for Barclays.

The remuneration committee of Barclays looked at what other people earned, took the highest number they could find and added a little. The little they added was less than £500,000 but what is that amongst friends?

This means that Bob earns about 50% more than the average of the group of banks used (presumably the banks that offered the highest packages) for benchmarking purposes. Keeping in mind that Bob has already earned more than £100 million out of Barclays, it is clearly not a question of need. Perhaps he can pull the same trick some of his colleagues have done and Tony B. and give some to charity from time to time and write a good press release. Seems to get some people’s sympathy.

Bob has been very good for Barclays, but my impression is that Barclays has been very good to him also. After all, it was Barclays that gave him the gambling chips so he could roll the dice. Not much different from Nick L. or Fred G. and several others. It has worked well both ways and both parties appear to have been very loyal to each other. His moves around the Lehman downfall have been interesting at least in so far as I have been able to understand them and Barclays did very well out of that thank you.
 As always the Board will tell you that other banks would jump at the opportunity to grab Bob. The same was probably true for Fred G at the time, but let us forget that hero to villain story. If Bob put a gun to the Board’s head then the Board needs to be very careful about giving in to threats. If the Board simply assumed, then they need to review their decision making processes. Someone played chicken. 

In the meantime I hope for Barclays, its customers, employees and shareholders that Bob’s banking continues to work. I hope the same for the nation, as I do not believe that even this coalition can rescue us from another gambling crisis.

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