Barclays (NYSE: BCS) CEO Diamond Not Shining So Bright
Bob Diamond, the Chief Executive Officer of Barclays (NYSE: BCS) is fighting to save his career as the firm endures financial losses, and punishment by the market for its role in the LIBOR market rigging scandal that occurred on his watch.
Last year, Diamond commented to a British parliamentary committee “There was a period of remorse and apology for banks and I think that period needs to be over. We need our banks (to be) willing to take risks … so we can create jobs.” He has been well known for his aggressive stance against regulators he felt failed to understand the intricacies of banking and markets. His vigorous defense now comes back to hurt him, as the very type of regulation he railed against for so long could have prevented the mounting losses, judicial inquiries, and stock plummet the firm has recently been enduring.
Authorities have found that Barclays traders rigged the Libor interest rate from 2005 to 2009 while Diamond headed the British bank’s investment banking operations. Now, Diamond’s tone has changed, as evidenced by a statement he issued Wednesday “I am sorry that some people acted in a manner not consistent with our culture and values.” As part of the statement, he also indicated that he would forgo his 2012 bonus.
British and U.S. regulators have fined Barclays $450 million for the scandal and Diamond’s job is on the line. Martin Taylor, who was Barclays chief executive from 1994 to 1998 commented “It’s for the board to decide whether Bob Diamond – who has amazing leadership qualities and huge personal following in the organization – whether he can be the person to turn the page on this or whether he is part of the problem. If you go in for a policy of systematic dishonesty you have some rebuilding to do. And I’m sure the board will be very conscious of that.”
The LIBOR rigging scheme is not the only blemish on the record, just four months ago Barclays was also accused of running “highly abusive” tax avoidance schemes, and all British banks have been hit by a multi-billion-pound insurance mis-selling controversy. Scrutiny in the coming days is likely to focus on how much senior management knew, and how far company culture was to blame. Only time will tell if Diamond gets to keep his job at the top of Barclays, but one thing is for certain – the hawkish Diamond of recent years won’t likely be appearing for quite a while.
