LONDON: Change swept through the top of Britain's banks on Tuesday, Sept 7 as Barclays said its investment banking supremo Bob Diamond will take over as chief executive and HSBC was expected to say its chairman is going into government.
Barclays said Diamond, credited with rebuilding its investment bank since joining 14 years ago and earning headline-making bonuses in the process, will take over from Chief Executive John Varley at the end of March.
Varley had indicated that he wanted to move on when he turned 55, which happens the day after his planned departure. The handover to Diamond, who is 59 and missed out on the top job when Varley took the helm six years ago, comes as no surprise to industry analysts, who said it meant the bank was likely to keep much of its focus on the investment banking arm, Barclays Capital, which has been the group's main source of profits in recent years.
Although the appointment puts the retail banking business in the shade, there is unlikely to be any change in strategy away from its universal banking model, the bank and analysts said.
"He's absolutely committed to making Barclays Capital the world's number one investment bank. The unique selling point for Barclays is that they are a universal bank and they will lend and finance and source funding for your deal, and Bob has been the champion of that model," said Simon Maughan, analyst at MF Global.
A UK Independent Commission on Banking is considering whether Barclays and the other big UK banks should be split up, to separate their riskier investment banking businesses from retail lending.
However, if it forces a change after it reports back to the UK government in a year's time, then Diamond could move the bank's domicile or go with the investment banking arm, analysts said.
Barclays, HSBC and Standard Chartered have all threatened to leave Britain should a break-up be ordered.
By 1005 GMT Barclays shares were down 3.5 percent at 312 pence, valuing it at 39 billion pounds, as dealers cited worries that the bank will shift its emphasis even further towards investment banking.
But Chairman Marcus Agius said it was premature to speculate on the Commission's findings and Diamond said there would be no change for strategy at Britain's third biggest bank, which avoided taking taxpayer bailout cash during the financial crisis and has emerged as one of the relative winners.
"There is absolutely no space between John and Marcus and I on the strategic direction of Barclays.
"We have a lot of work to do around execution, but there is no change of strategy here," Diamond told reporters on a conference call.
Affable and charismatic, the Concord, Massachusetts-born son of two teachers has built BarCap into one of the leading banks in debt markets and is attempting to take on Wall Street powerhouses such as Goldman Sachs by expanding into equities and advisory, boosted by the takeover of the U.S. operations of Lehman Brothers two years ago.
Diamond, who also runs Barclays' private banking arm and recently took control of the commercial bank, will move back to London after spending most of his time in New York after the Lehman deal. He will become deputy CEO for a handover period from October.
Diamond's long-time lieutenants Jerry del Missier and Rich Ricci will take over as co-chief executives of BarCap from October. Del Missier, who joined BarCap soon after Diamond, will be based in New York, while Ricci who joined in 1994, will be based in London. They were already co-chief executives for investment and corporate banking.
Part of the reason Diamond moved to New York is said to have been because of the intense scrutiny on his pay.
He has not taken a bonus in the last two years, but despite a base salry of only 250,000 pounds he was paid 21 million pounds in 2007 and received 26 million pounds last year for shares cashed in from the sale of asset management arm BGI, prompting a senior government official to brand him the "unacceptable face" of banking.
As CEO his base salary will rise to 1.35 million pounds, topped up by an annual bonus of up to 3.4 million pounds and an annual long-term share incentive scheme worth 6.8 million in 2011.
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HSBC CHANGE
Meanwhile HSBC's chairman Stephen Green is set to step down from Europe's biggest bank to become trade minister in Britain's coalition government, British media reported.
Confirmation was expected later on Tuesday.
Green, 62, joined HSBC in 1992 and was appointed chief executive in 2003 before taking up the role of chairman in 2006.
Mervyn Davies, a former chairman of Standard Chartered, served as trade minister under the Labour government which lost power in May, and the new government has had difficulty replacing him.
There has been speculation for some time that Green would step down, and in May the Sunday Telegraph newspaper said board members John Thornton and Simon Robertson were the frontrunners to replace him as chairman. The current chief executive is Michael Geoghegan, who is based in Hong Kong.
Green dismissed that report at the time and said he was planning to stay at the helm for at least another year.
Barclays' Varley has also been linked to a government job. But he said on Tuesday he had nothing lined up and planned to spend more time on his charitable work.
He will remain as a senior advisor on regulatory matters until October 2011.
Barclays said Diamond, credited with rebuilding its investment bank since joining 14 years ago and earning headline-making bonuses in the process, will take over from Chief Executive John Varley at the end of March.
Varley had indicated that he wanted to move on when he turned 55, which happens the day after his planned departure. The handover to Diamond, who is 59 and missed out on the top job when Varley took the helm six years ago, comes as no surprise to industry analysts, who said it meant the bank was likely to keep much of its focus on the investment banking arm, Barclays Capital, which has been the group's main source of profits in recent years.
Although the appointment puts the retail banking business in the shade, there is unlikely to be any change in strategy away from its universal banking model, the bank and analysts said.
"He's absolutely committed to making Barclays Capital the world's number one investment bank. The unique selling point for Barclays is that they are a universal bank and they will lend and finance and source funding for your deal, and Bob has been the champion of that model," said Simon Maughan, analyst at MF Global.
A UK Independent Commission on Banking is considering whether Barclays and the other big UK banks should be split up, to separate their riskier investment banking businesses from retail lending.
However, if it forces a change after it reports back to the UK government in a year's time, then Diamond could move the bank's domicile or go with the investment banking arm, analysts said.
Barclays, HSBC and Standard Chartered have all threatened to leave Britain should a break-up be ordered.
By 1005 GMT Barclays shares were down 3.5 percent at 312 pence, valuing it at 39 billion pounds, as dealers cited worries that the bank will shift its emphasis even further towards investment banking.
But Chairman Marcus Agius said it was premature to speculate on the Commission's findings and Diamond said there would be no change for strategy at Britain's third biggest bank, which avoided taking taxpayer bailout cash during the financial crisis and has emerged as one of the relative winners.
"There is absolutely no space between John and Marcus and I on the strategic direction of Barclays.
"We have a lot of work to do around execution, but there is no change of strategy here," Diamond told reporters on a conference call.
Affable and charismatic, the Concord, Massachusetts-born son of two teachers has built BarCap into one of the leading banks in debt markets and is attempting to take on Wall Street powerhouses such as Goldman Sachs by expanding into equities and advisory, boosted by the takeover of the U.S. operations of Lehman Brothers two years ago.
Diamond, who also runs Barclays' private banking arm and recently took control of the commercial bank, will move back to London after spending most of his time in New York after the Lehman deal. He will become deputy CEO for a handover period from October.
Diamond's long-time lieutenants Jerry del Missier and Rich Ricci will take over as co-chief executives of BarCap from October. Del Missier, who joined BarCap soon after Diamond, will be based in New York, while Ricci who joined in 1994, will be based in London. They were already co-chief executives for investment and corporate banking.
Part of the reason Diamond moved to New York is said to have been because of the intense scrutiny on his pay.
He has not taken a bonus in the last two years, but despite a base salry of only 250,000 pounds he was paid 21 million pounds in 2007 and received 26 million pounds last year for shares cashed in from the sale of asset management arm BGI, prompting a senior government official to brand him the "unacceptable face" of banking.
As CEO his base salary will rise to 1.35 million pounds, topped up by an annual bonus of up to 3.4 million pounds and an annual long-term share incentive scheme worth 6.8 million in 2011.
''
HSBC CHANGE
Meanwhile HSBC's chairman Stephen Green is set to step down from Europe's biggest bank to become trade minister in Britain's coalition government, British media reported.
Confirmation was expected later on Tuesday.
Green, 62, joined HSBC in 1992 and was appointed chief executive in 2003 before taking up the role of chairman in 2006.
Mervyn Davies, a former chairman of Standard Chartered, served as trade minister under the Labour government which lost power in May, and the new government has had difficulty replacing him.
There has been speculation for some time that Green would step down, and in May the Sunday Telegraph newspaper said board members John Thornton and Simon Robertson were the frontrunners to replace him as chairman. The current chief executive is Michael Geoghegan, who is based in Hong Kong.
Green dismissed that report at the time and said he was planning to stay at the helm for at least another year.
Barclays' Varley has also been linked to a government job. But he said on Tuesday he had nothing lined up and planned to spend more time on his charitable work.
He will remain as a senior advisor on regulatory matters until October 2011.
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