Agius, Barclays' chairman for the last five years, apparently made the decision to go over the weekend. In a statement this morning he said that the revelations over Libor fixing and the record £290m fine that followed have dealt a ‘devastating blow to Barclays' reputation. As chairman I am the ultimate guardian of the bank’s reputation. Accordingly the buck stops with me and I must acknowledge responsibility and stand aside.’
It’s hard to argue with his assessment of the reputational damage caused to Barclays. Like a naughty kid forced to explain the source of classroom sniggers by an unsmiling teacher, all those gung-ho traders’ emails aren’t quite so funny when the ‘joke’ has to be shared with everyone else. And now the cat is out of the bag and the pressure is mounting on both Barclays and the Government to do something about it.
Students of corporate governance may, however, take issue with Agius’s claim that the chairman is the ultimate guardian of reputation. Here at MT we thought that the chairman’s job was to run the board, while the senior executive, is this case CEO Bob Diamond, runs the company. Isn’t preserving the good name of the firm one of the things which he gets paid so handsomely for?
In this context, it looks rather like Agius has simply taken one for the boss - and quite a big one at that. Although he was up for retirement in a few months anyway, he is apparently due up to a full year’s salary of £750,000 for going early.
Meanwhile the £6m a year question is whether Diamond will follow him out of the door. Later this week both he and Agius are due to appear before the Treasury Select Committee, a meeting at which the Barclays pair may well try to deflect some of the attention onto what the Bank of England was doing about Libor at the time.
This is something of a red herring but might buy them enough time for the inevitable revelations that Barclays was far from being the only bank involved in rate fixing to emerge. That looks like Diamond’s best hope for survival.
Whatever happens, he won’t go without a fight. For one thing, the appointment of Bob Diamond as CEO - as red blooded a capitalist as there ever was - was a vital statement of intent from Barclays about how they intended to carry on post-crash. His departure under a cloud would be a clear admission of failure.
For another, people and institutions in positions of power, be they bankers today or trade unionists in the 1970s, don’t give them up willingly even (or especially) when it is probably the right thing to do. The analogy is not as gratuitous as it seems - the UK economy has gone, in the space of 35 years, from the extreme of being constrained by issues of labour relations and productivity, to the opposite extreme of being constrained by a dysfunctional banking system which keeps far too much of the nation’s economic spoils for itself.
As the same 35-year period suggests that the economy functions best in moderate rather than extreme circumstances, the time has come for a swing back in the other direction. But is there the political will to achieve it? Answers on a postcard please.
Read the MT interview with Marcus Agius