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David Weidner's Writing on the Wall
Dec. 15, 2009, 12:01 a.m. EST · Recommend (1) · Post:
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Best Buy's mixed blessing
By David Weidner, MarketWatch
LONDON (MarketWatch) -- Barclays President Bob Diamond chooses his words carefully these days. He doesn't offer a thought or an opinion that hasn't been considered and rehearsed.
There's good reason for this. Diamond is considered to be in line to be a chief executive either at Barclays /quotes/comstock/13*!bcs/quotes/nls/bcs (BCS 18.55, -0.57, -2.99%) , or another global bank. The open CEO spot at Bank of America Corp. /quotes/comstock/13*!bac/quotes/nls/bac (BAC 15.19, -0.44, -2.82%) is the one most often mentioned. He's reportedly turned it down, but until the job is filled don't count him out. More on that later.
Barclays Barclays' Bob Diamond
Diamond, 58, is the man of the hour because of his reputation. Already seen as a rising star before the financial crisis, he only burnished his image through a series of fortuitous moves that, depending on your vantage, look either brilliant or lucky.
Perhaps aware of his fate, Diamond has chosen coached responses over spontaneity. The big U.K. banks took government aid. Barclays didn't. That difference has many suggesting Diamond is Europe's answer to Jamie Dimon, the CEO of J.P. Morgan Chase & Co. /quotes/comstock/13*!jpm/quotes/nls/jpm (JPM 40.96, -0.81, -1.94%) who has emerged, as author Duff MacDonald put it, the "Last Man Standing" in the banking industry.
Given the position, it isn't wise to go popping off about doing "God's work," or uttering some other controversial nonsense.
Diamond doesn't. But that isn't to say he doesn't have some clear ideas about where the industry is going. Since he will likely be leading it in the future and driving whatever uneasy truce comes between government and business, his opinion may have more import than banks who are still dealing burned-out balance sheets and pay restrictions.
In an interview, I asked Diamond about the big bugaboo of the financial crisis, the maligned and disparaged universal banking model, the one favored by Barclays, B. of A., J.P. Morgan and Citigroup Inc. /quotes/comstock/13*!c/quotes/nls/c (C 3.51, -0.19, -5.14%) . Critics say these firms combined the casino of investment banking with the world's payment system: commercial and retail banking.
Diamond doesn't see it that way. He still thinks the model is viable and necessary. He adds that there's only a handful of institutions that are competing on that level today.
Barclays President Bob Diamond talks with David Weidner about the relevancy of the the universal banking model and what banks will look like in five years.
"It allows us to balance risks, balance funding," he said, "but most importantly it's best for serving our clients. It is the appropriate model for a global franchise...None of the people we compete with would be considered domestic."
In practice, Diamond believes there needs to be global banks to serve global customers. Barclays, he said, helps companies manage risk, negotiate complex derivatives and provide access to financing across the globe.
Diamond said he partly agrees with Dimon, who said a universal bank's success depends more on the management rather than the model. Diamond believes it's more balanced. "It's both," he said.
Barclays' time as a universal bank is short, dating back to the acquisition of Lehman Brothers out of bankruptcy in the fall of 2008. In other words, Barclays joined the party in the midst of the financial crisis and through a relatively small investment of $1.75 billion.
In Lehman, Diamond and Barclays narrowly avoided disaster, nearly pulling the trigger on a multi-billion dollar deal for the investment bank before the Bank of England refused to back it.
And that actually was the second dodged bullet. The first was when Barclays fell short in a summer-long bidding war with a Royal Bank of Scotland-led consortium to buy ABN Amro. It was a whopping $91 billion in cash and stock saved.
- 2009Citizen | 1:10 a.m. Today1:10 a.m. Dec. 15, 2009
There's bad news even in Best Buy's good news.
12:01 p.m. Today12:01 p.m. Dec. 15, 2009 | Comments: 8
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