In August 1993, Sally Bott received a call from a New York agent of a London head-hunter. She had been with Citigroup for almost 20 years. Although she had long left the trading floor for human resources, she retained that “engaging, funny and very direct” personality typical of traders.
That’s probably why the head-hunter called. Would she consider being Head of HR at Barclays De Zoete Wedd (BZW), the investment banking arm of Barclays? She could think of no reason not to be uninterested.
A meeting was arranged with BZW chairman Sir Peter Middleton and his deputy during their New York visit that month. She found it strange that they would meet in his hotel room. “Brits” she might have rationalised.
“She smoothed her skirt and knocked on the door” writes Dr Philip Augar in his book ‘The bank that lived a little: Barclays in the age of the very free market’. His book tracks the organisation’s twists and turns mainly from the 1986 Big Bang, through the 2008 Qatar capital-raise to the seeming hard Afr-Exit. Seeming? Well, remember it as the bank that lingered longer than prudent in apartheid South Africa bouncing back 10 years after the end of apartheid to bow out 10 years later. Who knows what it does in the next 10!
In the hotel room, the Brits gave her an overview of the bank. Sir Middleton got to the point: “We are looking for a bit more than a HR person. We want someone to help us reach out for global talent.”
Their mission was to transform Barclays to a truly global bank hence the quest for best talent. Was this a conversation she could take up with BZW CEO David Band? She met him at another hotel. As she talked through her CV, he told her “you’ve got the job”. As a HR person, the speed with which the decision was made worried her a bit.
In London, many were deeply worried about her new employer. It did not sit well with The Bank of England that a major British bank was leaning towards Wall Street style banking.
What was wrong with the tried and tested London banking traditions? Mercury Asset Management headed by Carol Galley was not happy with Barclays’ poor performance and the fact that there was no strategy in place to improve things. She was keen to work with other investors to effect organisational change.
A few months earlier, Sir Denys Henderson, chair of the board’s compensation committee, had met with 41-year old Martin Taylor.
“We don’t know what to do. Could you be of any use to us?” On August 19, about the time Bott was accepting the offer, a press statement announced Taylor as CEO.
He was shocked by a culture of snobbery he walked into in January 1994. Sally Bott who started that very month was more than shocked.
“Left alone in her office, she saw a mouse scurry across the floor, screamed and leapt onto a sofa”.
As the month went by, she was told her skirt was too short. As she toured the bank’s trading floors, she wondered; “Where are the Pakistanis? Where are the Indians? Where are the Chinese? Where are women?” As she reviewed the number which she knew well as a former trader, she was astounded by a lack of contribution from foreign exchange, fixed income and derivatives trading — all core income lines on Wall Street.
Remuneration was not linked to performance as per Wall Street holy grail and many who failed interviews still got hired.
At the end of her first month she raised the red flags to Taylor. He dismissed her as “a drama queen”. The penny dropped a year later. The bank had done well since they came in thanks to a booming economy.
An average bank will do well in a booming economy by merely growing its loan book and maintaining low provisions. Barclays did even better because it had cash from asset disposals which it used to retrench staff thus reducing overheads, share buybacks thus boosting share price and purchase of new technologies thus improving efficiencies. Revenues soared.
When things are good you dare not speak of looming trouble and expect a pat on the back. Alas, Taylor saw trouble looming. Dealers were not delivering but demanded bonuses. This culture of entitlement had long worried Bott.
As she had foreseen, Taylor realised the bank could not compete with Wall Street bankers.
London culture was different.
He wanted to get rid of BZW. It was sold in 1996. Arguably, BZW was a tricky venture from start. It was born from a wish to partake in 1970s corporate finance bonanza and thereafter justified by the leveraged buyout frenzy and Margaret Thatcher’s privatisations which made investment banking seem like easy money. A rise in interest rates and few banks mergers to shore-up shaky balance sheets in 1994-5 gave doubting Thomases a long-lost voice. But money was still trickling in from BZW.
In July 1996, Wall Street banker Bob Diamond was brought in to run newly constituted Barclays Capital formally launched in 1997. On his first day, Carol Bews, the assistant he had brought from the US, served him coffee on a tray with a cup and saucer. “That’s how they do things here” she told him.
As Barclays Capital was taking off, Taylor was leaving. The chairman would act as CEO. Two new CEOs later and the third taking over in 2005, it seemed good old London banking tradition had won.
Bott had left in 1999. But there was still Diamond. His numbers were erratic but strong. His Wall Street drive was as unmistakable as his Americanness. He would become CEO in 2011 after holding the title of President from 2005 — a title that is as American and it is un-British. Then came his “brutal expulsion” in 2012 the year Bott, who had returned in 2011, also left.
Was it over for a truly global bank?
Who knows! Who would have thought Agribank would consider reverting to its old form of Agricultural Finance Corporation?
The twists and turns in organisations’ strategic directions makes some of us wonder why they set out on such paths in the first place. Usually, the reasons are ambiguous.
Ambiguous or not, people brought in to transform the organisation tend to wilt within it or leave. As a result, few organisations shake off the very cultures they so much wish to shed. It is rather sad. But let us not part in this melancholy.
In the book from which this article draws, I met a 25-year-old young man in 2007. He worked for a hedge fund. He looked sleep-deprived in that morning meeting as his boss asked what he had for them. He answered: “Today it’s about Barclays. It is one of our biggest position we hold and I think it’s on the edge”. They did more research and agreed with him.
They dumped it all and went short. It dropped like a stone and they scooped it lower, half way down and more. Then he forgot all this and started crunching numbers. He studied the market. He scanned the world. He listened. He concluded that another round of organisational change was looming. They hoarded the stock, calls options and all. He was spot on. He would do this several times in the decade. Right now, he is probably thinking.
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