Comment: Bob Diamond stays but has certainly lost his shine
THE City seems to have mixed feelings about Barclays’ chairman Marcus Agius falling on his sword and chief executive Bob Diamond clinging on by his fingernails.
The bounce in the scandal-hit bank’s shares yesterday seems to suggest that investors believe no beneficial operational purpose would be served by Diamond quitting.
Few in the industry regard him as anything other than a talented, driven banker. However, that more sanguine view of the Barclays’ chief executive remaining in place despite the libor-fixing furore is counterbalanced by strong investor concerns about whether the resulting reputational damage to the bank can ever be sorted out while Diamond remains at the helm.
Personally, I don’t think it can and I suspect MPs at the Treasury select committee meeting to question him tomorrow will baldly ask him whether the wrong man has gone.
Agius said yesterday that, as the chairman, he was ultimately responsible for Barclays’ reputation and that the buck therefore had to stop with him. But this is debatable.
As mentioned here before, the libor scandal blew up from operational wrongdoing at the investment banking arm of the company of which Diamond was at the time the head.
Chairmen are not responsible for operational matters. That normally resides with the relevant operational directors and ultimately the person at the top of the tree, the chief executive.
The question is whether Diamond would be a lame duck boss in practical terms in such a politically sensitive industry as banking even if he did hang on to his job. Backing him would therefore be a gamble for investors even if they might be temporarily relieved at only having to search for a new chairman rather than a new chief executive as well.
City bulls of the bank’s shares are also comforted that litigation risks associated with the interbank rate- rigging look certain to be a multi-bank issue rather than Barclays-specific.
Meanwhile, the group is trying to ride out the storm through the Agius resignation, a search for an independent new chairman and an “audit” of past business practices.
It is questionable, however, whether it will all be enough to repair the bank’s credibility. While Diamond remains as chief executive, the elephant in the room politically and for investors will be that the man on whose watch the scandal happened and who is the public face of Barclays is tainted by association.
Banking has become intensely politicised for obvious reasons over the past five years. Will Barclays’ investors be comfortable farther down the line that Diamond man may be judged irreparably compromised in the eyes of those politicians and therefore make Barclays a lightning rod for any negative anti-banking sentiment, as Fred Goodwin became for Royal Bank of Scotland?
Scotland’s Olympic winners revealed
SCOTLAND’S economy is set to receive a £1 billion boost from the London Olympics, mainly in construction orders and tourism, according to a new report. It is a big figure, calculated as Scotland’s share of the £16.5bn in GDP that the UK economy is set to receive, and is likely to make even Olympics’ cynics pause for thought.
According to the report from the Bank of Scotland, entitled The Economic Impact of the London 2012 Olympic and Paralympic Games, the lion’s share of Scotland’s boost (£774 million) stems from Olympic orders for construction supplies and equipment, and spending of wages by workers in that supply chain.
A further £185m windfall north of the Border is expected from extra tourism generated by the games and their legacy.
It is clearly not about peanuts, even accepting that the estimates related to commercial spin-offs from the London Olympics, particularly as you get farther away from the main venues, owe something to guesswork as well.
Calculating a net boost to Scotland or one of the English regions from the games has to be as much an art as a science. But neither is it pie in the sky. Construction orders can be calculated and so can capital investment, and both have received a huge boost from the Olympics returning to Britain for the first time since 1948.
It looks like Scottish businesses have seized the opportunities presented to them by the sporting extravaganza.
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