Bob Diamond

Bob Diamond has a reputation as one of the top leaders in finance. I have serious reservations about him. Take a look at his biggest strategic decisions over the past 3 years:
1. Tried and failed to buy ABN Amro, at a price only marginally less than RBS’s ruinous “successful” bid.
2. At the peak of the crisis in 2008, took on 8,000 new staff as part of the Lehman to increase the bank’s global presence.
3. Refused government assistance in early 2009, choosing to take his chances on the bank’s own ability to raise private finance.
4. Sold a solid recurring-fee based business, BGI, to Blackrock at a good price but a good proportion of which went to himself and a select few managers.
5. Continued to be the most aggressive recruiter on the street throughout the crisis.

Every one of these decisions, at least except number 1 which was not so much a decision as a bit of help from the greater fool (I’m talking to you Fred Goodwin) theory, looks good in retrospect.

However many of these look to me like huge gambles which could each individually or collectively have brought the franchise to the brink and makes me think he is doubling up on red repeatedly. The one thing history teaches us is that these streaks inevitably end in tears.

I also can’t help but think of the parallels with UBS and John Costas. There was the transformative acquisition to turn the company into a global power (Lehman/Paine Webber), the constant expansion and recruitment in every market available, the move away from the more staid businesses (sale of BGI/turning the private bank into an extended sale force for the IB) and the self serving nature of some moves (sale of BGI/setting up Dillon Reed Capital Management).

I had a good run buying Barclays shares in 2009 at 50p and riding them up to 150p before I bailed but I would not touch these shares now. I think they will run up (non-appearance of P3 allowing) as they continue to reap the rewards of a lack of competition, weak GBP (reporting currency) and a ridiculously steep yield curve, but think that at some point in the next few years Bob’s chickens will come home to roost in a fairly disastrous way for Barclays shareholders.