His name is Diamond, Bob Diamond, and he is a fully fledged Master of the Universe; the chief executive of Barclays Bank, no less.
Barclays is a name to conjure with, with assets in excess of £2,000bn and revenues of £33bn (€29.6bn) in 2011. It is a household name in banking, tracing its origins back to the 18th century.
This week, Diamond is in the news for all the wrong reasons. A number of bank shareholders have indicated they may vote against the generous pay package — almost £17m in total — which the bank remuneration committee has proposed to set aside this year for the bank’s boss.
Included in the package is a commitment to meet a US tax bill of almost £6m incurred as a result of Diamond’s move from New York to London in order to assume the reins at Barclays HQ. Several million pounds each are being offered to two senior colleagues, including one Rich Ricci (you really could not make this up).
Diamond is not the first leading banker to feel the heat and he won’t be the last. His counterpart at RBS, Stephen Hester, was forced, under public pressure, to waive a hefty bonus earlier this year. The Lloyds boss Antonio Horta Osorvo has also come under fire.
In fact, banker bashing has taken over from fox hunting as the leading bloodsport in Britain.
Just yesterday UK Shareholders Association director Eric Chalker, whose organisation represents retail investors and has about 1,000 members, said: “It has become a truism that senior bank pay is grossly excessive and, some would say, immoral.”
In Ireland, caps on the pay of bankers running our bedraggled nationalised entities have taken a lot of the fun out of the chase. Our favourite panto villains emerge occasionally from the shadows to appear amid catcalls at AGMs, but the baying grows more muted as the years grind on.
In the City of London, however, big bucks are still the order of the day as privatised institutions proceed merrily along, recreating much of the buccaneering atmosphere of the pre-credit crunch world
The Barclays boss has been a standout earner both as CEO and in his previous capacity as chief of Barclays Capital, the group’s investment banking subsidiary. He has emerged as a media poster child, regularly accused of rapacity and shameless self justification.
In 2007, Diamond was reported to be taking home a pay packet worth £27m as boss of Barclays Capital, the investment banking business he had built up.
News of the award triggered an outcry at a time when the implosion of Northern Rock had yet to bring the credit binge to a shuddering halt.
Peter Mandelson, Tony Blair’s spindoctor-in-chief and then secretary of trade, described Diamond as “the unacceptable face of banking” — a bit rich from a man who likes to spend his summers on yachts owned by the wealthy.
Diamond and his ilk have been accused of fuelling the excesses of an unsustainable boom. However, Barclays actually did well for itself during the crash, snapping up the US operation of Lehman Brothers at a bargain basement price.
Early last year, Diamond, now newly installed as Barclays boss, appeared before the House of Commons treasury committee and enraged MPs by suggesting it was time to move on and not linger on the role of the banks in the financial crisis.
He talked of his modest Irish-American background as one of nine siblings. This tale of a self-made man cut little ice. Since then, he has rowed back and assumed a more penitent stance on the crisis, but this has done little to shake his reputation as a hugely successful “casino financier”.
Diamond may use the language of contrition, but he has declined to budge on key fundamentals. He insists that in a global marketplace top salaries must be on offer to London-based masters of the financial universe if that city is to hold on to its lead position.
He is also insistent that large banks should not be broken up, as some leading politicians have suggested.
Barclays has, however, continued to shed staff, with 3,000 going in 2011, out of a roll of 145,000.
There are signs that key shareholders and their representative bodies have had enough of the Babylonian largesse on offer to the people charged with managing their investments.
Ahead of the Barclays AGM on Apr 27, four leading institutional investors, Standard Life, Fidelity, Aviva, and Scottish Widows have signalled that they may either oppose the remuneration package, or will vote against the re-election of the chair of the remuneration committee.
The dissidents are unlikely to win out against the massed proxies of the board. Diamond is a director of another key Barclays investor, Blackrock, and his achievements as head of Barclays Capital will also count in his favour.
However, the National Association of Pension Funds and key industry bodies have signalled their unhappiness. Some would argue that such shareholder activism has been all too sporadic, with past efforts at sanction not bearing much in the way of tangible fruit. Indeed, the life and pensions industry stands in the dock accused of engaging in manager feather bedding at the expense of long-term saver-pensioner clients.
The outcome of this altercation between Barclay investor and management should interest Irish investors, given the exposure of fund managers to FTSE 100 companies. A redress in the balance of financial power between shareholder and professional manager is long overdue.
According to David Paterson, head of Corporate Governance at the NAPF, “what is needed in the banking industry is a fundamental realignment of pay so that it truly reflects the balance of interests between providers of capital and management”. Diamond has insisted such a redressing of the balance is underway. Others disagree.
Martin Wolf, for one, has expressed cynicism, in a recent Financial Times article, about Diamond’s protestation that banking is turning over a new leaf.
Diamond has insisted no taxpayers’ money will ever again be put at risk by his industry. He has vowed to fire employees considered to have engaged in unbecoming behaviour such as the group of six who ran up a £44,000 wine bill at a London restaurant in 2004.
Wolf wrote: “We need to see changes in how banks manage themselves.”
Diamond has called on banks to boost their return on capital. Wolf profoundly disagrees: “Return on equity is the wrong target... over the past 10 to 15 years, it has helped to make many bankers rich, and loyal shareholders poor.
It prompts banks to keep loss adjusting capital low. This makes enterprises vulnerable and our financial system fragile.”
Diamond has written that banks must increase profits in a way that creates sustainable value, but Wolf, the dean of UK financial journalism responds with little enthusiasm to such comments:
“It all makes one feel all warm, does it not? So why am I cynical. I look at incentives and behaviour, not words.”
When it comes to the acid test of commitment, a willingness to accept pay restraint, Diamond and other senior colleagues seem to live in a time capsule circa 2005.
Perhaps they need reminding that all that glitters is not gold, and that with great privilege comes responsibility.
* Born: US. Grew up in Massachusetts.
* Education: Universityof Connecticut, MBA.
* Early career: Universitylecturer.
* 1979: Started out as a bond trader at Morgan Stanley.
* 1992: Running theAsian operation of Credit Suisse First Boston.
* 1996: Joined, BZW, stockbroking arm of Barclays.
* Career path: Merged BZW with Wells Fargo trading and Nikko Securities to form Barclays Capital. Transformed Barcap into an investment powerhouse.
* January, 2011: Took over as group chief executive Barclays.