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The eagle has re-branded: As Barclays Bank withdraws from Africa, a highly revealing new book examines its transformation from gentlemanly institution to would-be global player.

The Bank That Lived a Little: Barclays in the Age of the Very Free Market

By Philip Augar

25[pounds sterling] Allen Lane ISBN: 978-0241335970

In July, Maria Ramos, the chief executive of Absa Bank, confirmed that she is overseeing a complex operation to rebrand Barclays' presence in Africa under the Absa banner. Barclays has decided to pull out of Africa.

The British bank's 100-year history on the continent, with units in Botswana, Ghana, Kenya, Mauritius, Mozambique, Seychelles, Tanzania, Uganda and Zambia as well as South Africa, is drawing to a close.

It is a history that has often been controversial, no more so than in the last 50 years.

Barclays has faced accusations of historical involvement in the slave trade and stirred controversy through its involvement in the economy of apartheid South Africa, where it invested significantly in government military bonds.

As author Philip Augar puts it, Barclays did eventually pull out of apartheid South Africa, but only in 1986, when it became commercially expedient, hastened by an increasingly successful anti-apartheid boycott campaign in the UK.

Certainly, Barclays' image of being a gentlemanly institution took a huge knock.

The Big Bang

But 1986 also coincided with what became known as the "Big Bang".

The Big Bang, with its deregulation of financial services, including the abolition of fixed commissions on share deals, transformed the way London's financial sector, known as "The City", conducted business.

With the Big Bang reforms introduced on 27 October 1986, banks including Barclays rushed to take over Stock Exchange firms.

Barclays bought two important partnerships, securities "market maker" Wedd Durlacher, and De Zoete Bevan, an advisory firm, and folded both into its merchant bank to create Barclays BZW. New technologies would soon lend a hand in creating the brave new world that the Big Bang had promised. In stockbroking, computers took over from pencil and notebook.

The Barclays BZW initiative was the brainchild of Lord Tom Camoys, the managing director of Barclays Merchant Bank, who was eager to bring new energy into a bank whose board was set in its ways.

Camoys was of aristocratic birth, said to be a distant descendent of England's King Charles I. But, Augar notes, "he had little of the wealth that his peers enjoyed, and no inclination to lead a life of idleness".

However, following a stroke in 1987, Camoys, aged just 47 years, had to step down. Many saw this loss as a near-fatal blow to Barclays BZW.

Camoys' successor, David Band, shared his vision of transforming Barclays into a global bank, able to compete with the American "bulge bracket" banks--the handful of US banks who led most of the heavyweight deals and syndications. Barclays' institutional shareholders had compared its performance to that of US investment banks, and found it wanting.

David Band's untimely death in May 1996 prompted headhunters to look across the Atlantic for new talent.

The diamond geezer

Their gaze alighted on a person who plays a central role in the book's complex story--Robert E (Bob) Diamond--who joined the firm in July 1996. It was, in Augar's words, "a turning point in Barclays history".

Diamond built his reputation at Morgan Stanley and Credit Suisse First Boston and brought his experience and reputation in trading in bonds, foreign exchange and derivatives to London. The move was a culture shock. He was confronted by a culture of long, liquid lunches, tribalism and a trading floor that he described as "the worst environment he had ever encountered".

Nevertheless, Diamond sensed that there were opportunities beckoning. He proceeded with an analysis that uncovered the shocking fact that Barclays BZW's top five clients were Goldman Sachs, Morgan Stanley, JP Morgan, HSBC and Citibank.

He realised that these competitors were all coming to Barclays BZW when they were in trouble. He concluded that they were using his banks balance sheets to clear up their own mess. No wonder that Barclays BZW was less profitable than its investment bank peers. Diamond's boss, Barclays chief executive Martin Taylor, realised that the investment bank was contributing little to the bottom line.

BZW bows out

Taylor decided to dispose of Barclays BZW's corporate finance, equities and Australian businesses. And so Barclays Capital was formed, led by Diamond. Augar writes that "Diamond surprised [the nay-sayers] using Barclays' strong brand, credit rating and balance sheet to build a different kind of business ... these were boom times for bond markets but it took inspirational leadership to exploit the benign conditions."

There were crises, not least when in 1997 it emerged that Barclays Capital was exposed to Russia's devaluation of the rouble, and the country defaulted on its debt obligations. Some felt the firm was "accident prone and more likely to spring an unpleasant surprise than to succeed".

Qatari imbroglio

Diamond continued to lead Barclays Capital under four more chief executives before becoming chief executive of the bank in 2011.

Yet scandals emerged that would have lasting implications for Barclays. The firm controversially raised 12bn [pounds sterling] in loans from Qatar at the height of the financial crisis in 2008 in order to avoid a government bailout. The UK's Serious Fraud Office argued that the loan was used unlawfully to directly or indirectly buy shares in the bank.

Charges were dismissed by the British courts in July this year, but the SFO has since applied to reinstate charges.

The other scandal that came much closer to Diamond's door was evidence of the manipulation of the London Inter Bank Offer Rate, or LIBOR, by Barclays' traders.

After consistent pressure from the regulators, the Bank of England and the chancellor, Diamond fell on his sword.

Resigning from Barclays in July 2012, Diamond went on to found the London-listed Atlas Mara in 2013, an investment company focused on African banking and finance. But it has not been smooth sailing. Atlas Mara's shares have fallen by 80% in five years.

This book tells Barclays' story over the last 35 years in remarkable detail. It's a narrative that is highly revealing of the ban-king industry and the characters that inhabit it.

Caption: Bob Diamond (pictured above), was a central figure at Barclays between 1996 and 2012.
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Comment:The eagle has re-branded: As Barclays Bank withdraws from Africa, a highly revealing new book examines its transformation from gentlemanly institution to would-be global player.
Author:Williams, Stephen
Publication:African Business
Geographic Code:60AFR
Date:Oct 1, 2018
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