Bob Diamond

Bob Diamond
Diamond at the World Economic Forum in 2012.
Born	Robert Edward Diamond Jr. 1951-07-27July 27, 1951 (age 75) Concord, Massachusetts, U.S.
Nationality	American
Education	Concord-Carlisle High School (1969) Colby College (B.A., economics, 1973) University of Connecticut School of Business (M.B.A.)
Alma mater	Colby College
Occupation	Banker
Years active	1976-present
Employer	Morgan Stanley (1979-1992) CS First Boston (1992-1995) Barclays plc (1996-2012) Atlas Mara Limited (2013-2019)
Company	Barclays plc
Title	Group chief executive, Barclays plc
Term	2011-2012
Predecessor	John Varley
Successor	Antony Jenkins
Known for	Building Barclays Capital into a global investment bank Acquisition of Lehman Brothers' North American business Resignation over the Libor scandal
Spouse	Jennifer Diamond (m. 1983)
Children	3

Robert Edward Diamond Jr. (born July 27, 1951) is an American banker who served as group chief executive of Barclays plc from January 2011 until July 2012. He resigned following the Libor scandal, in which traders employed by the bank were found to have manipulated benchmark interest rates.

Diamond joined Barclays in 1996 and built its investment banking arm, Barclays Capital, from a modest operation into a global business capable of competing with the largest American firms. His most consequential transaction came in September 2008, when, days after the Bank of England blocked Barclays from acquiring Lehman Brothers whole, he negotiated the purchase of Lehman's North American investment banking and capital markets operations out of bankruptcy for about $1.75 billion. The deal gave Barclays a substantial Wall Street presence it had spent a decade failing to build.

His prominence made him a central figure in the British debate over banking after the financial crisis. He was labelled "the unacceptable face of banking" by the business secretary Peter Mandelson, a phrase that followed him for the rest of his career, and his remark to a parliamentary committee in January 2011 that the period of remorse and apology for banks was over was widely quoted against him.

Barclays was fined about £290 million in June 2012 for breaches relating to Libor and Euribor, including a then record £59.5 million penalty from the Financial Services Authority. Diamond initially refused to resign and gave up his bonus, but stepped down on July 3, 2012, a day after the chairman Marcus Agius. He subsequently co-founded Atlas Mara Limited, a vehicle for acquiring African banks, which raised $325 million at its 2013 flotation and whose shares later lost substantially all of their value.

Early life and education

Family background

Robert Edward Diamond Jr. was born in Concord, Massachusetts, one of nine children in a Roman Catholic family of Irish descent. His parents, Anne and Robert Edward Diamond Sr., were both teachers, his father a school principal.

The household was not wealthy, and Diamond has referred to his background in explaining a lasting distance from the British establishment he later worked among. The size of the family and his parents' profession are recurring features of profiles written during his years at Barclays, generally deployed to contrast his origins with the scale of his eventual pay.

Education

Diamond completed his schooling at Concord-Carlisle High School in 1969. He took a Bachelor of Arts in economics with honours at Colby College in Waterville, Maine, graduating in 1973, and was a member of the Phi Delta Theta fraternity.

He then took a Master of Business Administration at the University of Connecticut School of Business, graduating first in his class.

Career

Early roles

Diamond began his working life in academia, lecturing at the School of Business at the University of Connecticut from 1976 to 1977. He then worked briefly in the information technology department of the United States Surgical Corporation in Norwalk, Connecticut.

Morgan Stanley, 1979-1992

Diamond joined Morgan Stanley in 1979 and spent 13 years there, holding a series of positions and rising to managing director and head of the fixed income trading division. The period established his specialism. Unlike many bank chief executives of his generation, who came from corporate finance or from retail banking, Diamond was a markets man, and his later strategy at Barclays reflected a conviction that trading and debt origination, rather than advisory work, were where scale produced returns.

CS First Boston, 1992-1995

Diamond joined CS First Boston in 1992. Based in Tokyo, he served as chairman, president and chief executive of CS First Boston Pacific, responsible for investment banking, equities, fixed income and foreign exchange across the region. He had previously been vice chairman and head of global fixed income and foreign exchange.

He was forced out in 1995 following a firm-wide dispute over the allocation of the bonus pool, an episode that prefigured later controversies over his views on compensation.

Barclays, 1996-2012

Building Barclays Capital

Diamond joined Barclays on July 4, 1996, and became a member of the executive committee in September 1997. He was given responsibility for Barclays Capital, the investment banking arm, which had been created after Barclays de Merchant Bank retreated from equities and mergers advisory work following heavy losses.

His strategy was to avoid competing across the whole of investment banking and instead to build a business concentrated on fixed income, currencies and commodities, where Barclays could achieve scale without the capital and reputational demands of full-service equity underwriting. The approach worked. Barclays Capital grew to become one of the largest debt houses in the world and came to generate a substantial and rising share of group profits.

He was later appointed chief executive of corporate and investment banking and wealth management, covering Barclays Capital, Barclays Corporate and Barclays Wealth, and served as an executive director of the boards of both Barclays plc and Barclays Bank plc.

Succession in 2004

Diamond was a leading candidate to succeed Matthew Barrett as group chief executive in 2004. The board instead appointed John Varley, five years his junior and a product of the retail and corporate side of the bank. The choice reflected a reluctance among British directors to place an American investment banker at the head of a high street institution, and Diamond remained in charge of the investment bank.

He was appointed president of Barclays plc in 2005 and joined the board, while continuing to run Barclays Capital.

Lehman Brothers

Diamond led Barclays' attempt to buy Lehman Brothers outright in September 2008. The Bank of England declined to approve the transaction, on the view that Barclays could not guarantee Lehman's trading book over the weekend and that the British taxpayer should not underwrite an American investment bank. The refusal was criticised at the time as leaving Lehman no alternative to bankruptcy, and was later re-evaluated as having spared Barclays exposure to about $85 billion of assets that proved to be impaired.

After Lehman filed for bankruptcy, Diamond negotiated with its president and chief operating officer Bart McDade to buy the North American investment banking and capital markets business out of the estate for about $1.75 billion, of which roughly $250 million was for the operating business and about $1.5 billion represented Lehman's Manhattan headquarters and two data centres.

The purchase gave Barclays an immediate presence in United States equities, advisory and research that it had not been able to build organically. Bloomberg later reported that the acquired business was a substantial contributor to Barclays' earnings in the years that followed.

Group chief executive

Diamond became deputy group chief executive on October 1, 2010, and succeeded Varley as group chief executive on January 1, 2011.

His appointment was contentious before he had taken any decision, because it placed at the head of Britain's second largest bank the executive most closely identified with investment banking and with large bonuses, at a moment when public anger at the sector was near its peak. Barclays had not taken British government capital during the crisis, having raised money instead from Middle Eastern investors, and Diamond regarded this as entitling the bank to greater latitude than its rescued competitors.

Appearing before the House of Commons Treasury Select Committee in January 2011, days into the job, he said that "there was a period of remorse and apology for banks. I think that period is over." The remark was repeated in headlines for years afterwards and came to define public perception of him.

Barclays disclosed a bonus of about £6.5 million to Diamond for 2010, having waived bonuses for 2008 and 2009. His total pay for 2011 was reported at figures in excess of £17 million once share awards and a tax payment made on his behalf were included, and it prompted a shareholder revolt at the 2012 annual meeting, after which the bank agreed to tie a larger proportion of executive awards to performance.

Atlas Mara

On November 28, 2013, Diamond and the Rwanda-based entrepreneur Ashish Thakkar founded Atlas Mara Limited, a company formed to acquire and operate banks across sub-Saharan Africa. It listed on the Alternative Investment Market in London on December 17, 2013, raising $325 million.

The venture did not prosper. Atlas Mara acquired interests in banks in Nigeria, Rwanda, Zambia, Botswana, Mozambique, Tanzania and Zimbabwe, but struggled with currency depreciation, the cost of servicing its debt and the difficulty of integrating separate national franchises. Diamond stepped down from management in February 2019 while remaining a director. By November 2024 the shares, issued at £10.20, had last traded at 0.0001 pence, a loss of effectively the entire flotation value, and the stock had ceased to trade meaningfully.

Business philosophy and management style

Diamond's strategy at Barclays Capital rested on a single proposition: that an investment bank need not be strong in every product to be profitable, and that concentration on fixed income, currencies and commodities would allow a European bank to reach scale against American competitors without matching them everywhere. He executed that view consistently for more than a decade, and the growth of Barclays Capital from a restructured remnant into a business generating the majority of group profits is the principal evidence for it.

He was an unusually direct advocate of the view that banking talent is mobile and must be paid at international rates, a position he maintained in public through the period when it was least popular in Britain. He defended large bonuses before parliamentary committees and in the press on the grounds that Barclays competed for staff with firms in New York and that restraint would hand business to competitors.

He placed weight on what he termed culture, telling the BBC in his 2011 Today Business Lecture that "culture is how people behave when no one is watching", a formulation that was quoted back at him extensively after the Libor findings the following year.

Colleagues described a manager who delegated widely to a small group of long-serving lieutenants, among them Jerry del Missier and Rich Ricci, and who inspired strong loyalty within the investment bank while remaining at a distance from the retail side of the group. Critics of Barclays' governance argued that this concentration of authority and reward within one division, and the board's limited understanding of it, was among the conditions that permitted the Libor misconduct to go undetected.

Controversies

The double dip tax arrangements

On June 30, 2006, The Wall Street Journal published a front page article by Carrick Mollenkamp describing how Barclays Capital derived a large part of its income not from conventional investment banking but from a structure known as a double dip.

In a typical transaction Barclays and an American bank would together finance an asset purchase, such as an aircraft for an airline. A subsidiary with no employees, jointly owned by the two banks, was established to hold the transaction and paid tax on the interest income. Both Barclays and the American bank would then claim the full tax credit for that payment from their respective tax authorities, so that the same tax was relieved twice. Barclays was reported to be earning more than £1 billion a year from the practice.

The disclosure angered Parliament, the Bank of England, the Inland Revenue and the United States Internal Revenue Service, and the arrangements were subsequently outlawed, removing a significant source of income. The episode damaged Diamond's standing with British regulators and legislators and contributed to Peter Mandelson, then business secretary, describing him as "the unacceptable face of banking".

The Libor scandal

In June 2012 Barclays was fined about £290 million in total by British and American authorities for what the Financial Services Authority described as "serious, widespread breaches of City rules relating to the Libor and Euribor rates". The FSA component, £59.5 million, was the largest penalty it had imposed on any firm to that date. The United States Department of Justice and the Commodity Futures Trading Commission were also parties to the settlement.

The findings covered two distinct forms of misconduct. Traders had asked the bank's rate submitters to move submissions to benefit their own positions, a straightforward attempt at profit. Separately, during the 2008 crisis, the bank had submitted rates lower than its true cost of borrowing in order to appear more robust than it was.

The FSA's director of enforcement called the behaviour "completely unacceptable", adding that "Libor is an incredibly important benchmark reference rate, and it is relied on for many, many hundreds of thousands of contracts all over the world."

Diamond said he was "sickened" by the conduct and announced on June 29, 2012, that he would not resign. He gave up his bonus for 2012. Political pressure intensified; the Liberal Democrat peer Lord Oakeshott said that "if he had any shame he would go. If the Barclays board has any backbone, they'll sack him."

Marcus Agius, the chairman, resigned on July 2. Diamond resigned with immediate effect the following day, July 3, after a hearing involving the Bank of England, whose governor Mervyn King had made clear that Diamond no longer held regulatory confidence. Jerry del Missier, who had been appointed chief operating officer on June 22, resigned on July 2.

The Tucker conversation

A note made by Diamond of an October 2008 telephone conversation with Paul Tucker, then deputy governor of the Bank of England, became central to the political controversy. The note recorded Tucker relaying that senior figures in Whitehall were concerned about Barclays' consistently high Libor submissions and questioning whether they needed always to be as high.

Del Missier told a parliamentary committee that he had understood from Diamond that the Bank of England wanted submissions lowered and had passed that instruction down. Diamond testified that he had not interpreted the conversation as an instruction and had not passed one on. Tucker told the Treasury Committee that he had given no encouragement to make false submissions. The Financial Services Authority found no evidence that the Bank of England had directed the lowballing.

The New York Times reported on July 16, 2012, the account of a former senior Barclays executive who said instructions to lower submissions had come from Diamond following the Tucker discussion.

Departure terms

Diamond initially stood to receive deferred awards reported at up to about £20 million. Following negotiation with the bank and further political pressure he forfeited the large majority of them, retaining a payment of about £2 million paid in July 2013, together with contractual entitlements.

A parliamentary committee subsequently criticised his evidence, with the chair of the Commission on Banking Standards saying in August 2012 that Diamond's testimony had been "highly selective" and had fallen short of the candour expected. Diamond rejected the characterisation.

Assessment

Commentary at the time and since has been divided on how far Diamond was personally culpable. The New York Times observed that his own role in the manipulation appeared minimal and suggested that the substantive reason for his removal was that he had become, in Mandelson's phrase, the unacceptable face of banking. The Financial Times reported a similar view: "After the financial crisis, the British establishment became very divided over what's the model for the big banks that we want to see. Bob represented investment banking big time. He represented the success of it, but also the sense that investment banking is dicey and not a completely sound business. He represented a way of doing business that we've become very uncomfortable with."

The contrary view holds that a chief executive is accountable for the culture of the institution he leads, that Diamond had himself made culture the subject of a public lecture months earlier, and that misconduct extending over years in a division he had built and run was his responsibility whether or not he knew of it.

Personal life

Diamond married Jennifer, an engineer from Michigan, in 1983. They have three children. The family lived in London for much of his Barclays career, and his children were educated in Britain, although he retained his American citizenship and did not seek British nationality.

Diamond is a Republican and served as an adviser to Boris Johnson during his 2008 campaign for Mayor of London.

He is chairman of the board of trustees of Colby College, his undergraduate institution, to which he has been a substantial donor, and chairman of Old Vic Productions plc. He has served as a trustee of the Mayor's Fund for London, a member of the advisory board of the Judge Business School at the University of Cambridge, a member of the international advisory board of the British-American Business Council, a life member of the Council on Foreign Relations, and a member of the Atlantic Council.

With his wife he is a founding circle member of The Nantucket Project, an annual festival of ideas held on Nantucket, Massachusetts.

Bloomberg Markets magazine included Diamond in its ranking of the 50 most influential figures in finance in 2011, the year before his resignation.

External links

• Barclays plc