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What a difference a decade (and two weeks) makes. As he enters talks to
buy the prime cuts of Lehman Brothers Holdings Inc., Bob Diamond, the
CEO of Barlcays plc, must be thinking he wasn't in such a sweet
position in September 1998.
Diamond reportedly has agreed to buy the broker-dealer unit of bankrupt
Lehman, which filed Chapter 11 bankruptcy protection on Monday after
failing to secure a sale to Barclays and Bank of America Corp., which
instead opted to buy Merrill Lynch & Co. Interestingly, a decade ago it was
Diamond who felt he needed protection of some sort.
Following on the heels of the Asian financial crisis, Russia had defaulted on its domestic debt, and British banks were pleased to say they had virtually no exposure to Russia -- all, that is, except Barclays. On Sept. 1, 1998, Barclays revealed that it would take a second-half charge of £250 million (then worth about $425 million) because Barclays Capital, which Diamond headed, owned Russian debt. The announcement came only 10 months after Barclays had sold its equity business for a paltry £100 million, promising investors that Barclays Capital's focus on debt securities would be safer and more profitable than the stocks business. The bank held a press briefing to discuss the Russian fiasco, and 10 years down the line two memories linger. First, Barclays CEO Martin Taylor was so determined to put on a brave face that he burst into the room with a flourish, seated all the reporters and personally passed around a tray of sandwiches as he chatted with everyone. Taylor, a former editor of the Financial Times' Lex column, always prided himself on his handling of journalists, and this was one bravado performance. The second prevalent memory was the sight of Diamond sullenly sitting beside Taylor, muttering one-sentence answers when called upon. A veteran of Credit Suisse and Morgan Stanley, Diamond usually carried himself with considerable moxy, but that day he was glum, pale, devastated. But, he was also a survivor, and when the Barclays board finally went looking for heads, it was Taylor who considered his position untenable and resigned in November 1998. Bob Diamond lost his champion, but he has clung on and thrived. And now, 10 years and two weeks later, he's negotiating with Dick Fuld, who likely is as shell-shocked as he was in 1998. - Peter Moreira Categories Deal Video
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