The rise and fall of 'casino banker' Bob Diamond
'The unacceptable face of banking' is facing calls to quit over Barclays' market manipulation
WHEN Peter Mandelson spoke in 1998 about New Labour being "intensely relaxed about people getting filthy rich" he could easily have been talking about Bob Diamond, then a glittering American talent helping turn Barclays Bank into an international powerhouse.
Yet by 2010, Mandelson was dubbing him the "unacceptable face of banking" after Diamond, head of Barclays' investment arm, was reported to have taken a £63m bonus for - in Mandelson's words - "deal-making and shuffling paper around".
Since March 2011, Diamond has been the bank’s chief executive. That he should end up being portrayed as a modern-day Gordon Gekko, a 'casino banker' who wheeled and dealed his way to a £105m personal fortune according to the Sunday Times Rich List, belies his modest roots.
Born in Concord, Massachusetts, one of nine children raised by teacher parents, Diamond's working life began as a lecturer at the University of Connecticut.
He joined the blue-blooded Morgan Stanley investment bank in 1979 as a bond trader, spending 13 years there, before eventually pitching up at Barclays in 1996. Taking over BZW, the firm's stockbroking arm, Diamond began to build up a reputation as an aggressive banker.
Within years he had overseen a series of mergers that created Barclays Capital, which was to become an investment banking powerhouse. As more and more of the bank's overall profits were generated by Diamond's team, his profile grew and he was in the running to become chief executive of all of Barclays in 2004 before losing out to John Varley (whom he later succeeded).
One of Diamond's greatest achievements came during the 2008 financial crisis, when he oversaw the acquisition of the brokerage arm of the collapsed American bank Lehman Brothers for £1.1bn ($1.7bn).
The profits he had generated before the crash had already ensured that Barclays did not have to apply for any government funding to stay afloat like most of its competitors, and the controversial Lehmans deal meant that the bank was able to ride out the storm and return profits of £11.6bn in 2009, double the previous year.
Diamond was ultimately rewarded with the top job at Barclays last year, but the higher profile role, and the fact that the Libor rate manipulation took place under his watch at the investment banking division, meant he has come under intense scrutiny.
Shareholders were already concerned by Diamond's pay packet of £17m in 2011, and his agreement to forgo his annual bonus is not nearly enough to pacify those demanding that he quit. Even old allies are already turning on him, with London mayor Boris Johnson saying that the behaviour of Barclays was "almost certainly criminal" that needed a "proper investigation".