So Bob Diamond has finally resigned over the scandal that has raged around Barclays and seen fine of £290 million levied on them. Did he jump or was he pushed? Draw your own conclusions, but once a person becomes a liability rather than an asset, they need to be removed from the balance sheet.
Is this the end of the matter? Not by a long way. There's a culture within the banking sector that will take more than the resignation of one high-profile figure to resolve. Banks are no longer seen as safe places for our money, or a trusted friend who will help businesses grow, or ease them through hard times.
Ironically, as the face of a major bank falls on his sword, it's the faceless nature of banking that has been a growing trend. No-one in our local branch seems to care about us any more or know us by name. It's impossible even to phone a branch, and instead we need to speak to a distant voice more interested in our security details than how they can help us.
Of course, now that Bob Diamond has decided to spend more time with his money, things may change a little. But there's a long, long way to go yet. For now, Diamonds aren't a bank's best friend.
7 comments:
Great post, Alan. I wish we could get back to the old days and bankers like George Bailey in It's a Wonderful Life. Even though he had his problems with customer trust for a while as well, he was determined to redeem himself and he cared.
Why I feel nostalgic about a time when I wasn't even alive, I don't know. And modern banking does have its advantages like convenience and speed. But you are right that it would be nice if things were more personal and you felt your banker really cared about you and your business.
In the end, this came down to a PR choice of accepting the inevitable. On the weekend, the shareholders wanted him to stay, and so sacrificed the chairman; after Cameron/Osborne's statement on Monday in the Commons, and the obvious conclusion that this was not going to end this week, he had to go.
Diamond had strung his personal brand and Barclay's strategy around Investmet banking. So 16 years in the trade, in charge of the team that undertook the Libor fix that he originated with a phone call from the BoE, meant that it was difficult for him to dodge the bullet in the post-crash era of taking responsibility.
Coming at this from an employment view point, how do you handle succession planning when the wider conslusion is that a whole generation of greedy and over paid people need to be got rid of? Secondly, from an economic recovery view point, will this new austere era headed by risk negative newcomers to the sector mean that this economic dull period lasts not for a few years, but a few decades?
One of the positive choices for who ever takes over the helm - of Barclays, let alone the PR of banking in geeral - would be to put the personality back into banking. As the son of a high street banker, my relationship with my banks has certainly become "remote" at best pre-recession, and is now even more distant.
We need radical change within our Banking sector not only in the UK but around the world, but instead of waiting for other countries to act, we need to show leadership and change the way the banking sector works.
There is a total disconnect between the salaries and bonuses of people working in banking and fund management, where the few seem to benefit hugely and investors seem to be cheated out of dividends.
When did it become acceptable for a bank to cut its dividend only to still pay its employees £1.5 billion in bonuses. There seems to be direct relationship between the greed culture in our banks and the misdemeanours like the manipulation of LIBOR. I want to see some form of salary cap imposed on these types of employees maybe as a multiple of income related to the poorest paid workers - I also think that the maximum bonus that should be paid is 50% salary. After all these individuals are only employees and not the owners of the business - if a company does well it is the owners of the business that should be reported not the employees to a disproportionate amount. If some of these employees wish to break off and create their own companies then that is fine, but as employees then needs to be more of a relationship between those at the bottom of the scale and protection of shareholders rights.
I'm not sure that Diamond's resignation was as simple as would at first seem. I suspect that there was a significant Board-Room tussle going on with soundings being made to Government.
Actually we will all know very soon and that will be when his departing pay package is published. He will possibly be rewarded for remaining silent on Barclay's business. Ie No book, no interviews and so on!
Actually this is possibly one more nail in the City's coffin as being the leading European financial site. The Germans and French are straining to set up a central EU institution that will rival London.
It could be the beginning of the end of London's influence (over many years) and why the Government is desperate NOT to have a public enquiry with open ended dates rather than shoring up the dyke and hoping that a recovery in reputation and culture can take place quietly
Spot on Alan. It's sad and rather telling that he's resigned because his continued presence was damaging the brand (or 'franchise' as he put it) rather than because he felt responsible for what went wrong. Indeed, he does not seem to believe he HAS done anything wrong.
It's the start of the end for the City, I feel, and the decline could be quite rapid. Not a bad thing, IMHO, as we will now focus on the real economy. I would counter Ian's fears with Einstein's quote "We cannot solve our problems with the same thinking we used when we created them."
Quite so, Alan. The trouble is though that whilst we rail at 'the bank' and rue the lack of personal service we are still only traversing the foothills of the banking world. High Street banking is as different from 'casino banking' and the rarified air breathed in investment banks as our Sunday walk is to ascending Glencoe.
Being as it were above the clouds is clearly how the perspective gets lost. There will be few tears today, I suspect, over the departure of someone portrayed as arrogantly out of touch. But in wishing for greater transparency and accountability we will almost certainly be risking a vast City dividend that props up much else.
Stephen Harvard Davis (above) is right - the Government will (again) be desperately hoping that the banking sector can review and revitalise itself quietly and quickly. There's a huge amount at stake.
And now COO Jerry del Missier goes as well! Just tried to get hold of a friend who works high up in Barclays, and his comment was: "On a stream of conference calls, catch-up this evening post 20:30!" Can't see the wood for the trees? There won't be many trees left soon....
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