John Varley and Bob Diamond: Barclays duo sing from same balance sheet
John Varley and Bob Diamond are a little too keen to emphasise how seamless team work got them a £4.5bn cash injection without having to resort to a messy rights issue. Andrew Cave reports.
John Varley and Bob Diamond are taking time out from their hectic fundraising tour to kill a few myths about their supposedly prickly relationship at the top of Barclays. “It’s because they all think I’m a brash American,” laughs Diamond, Barclays president, casting a look at the group’s chief executive Varley, resplendent in his usual red braces.
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“But I’m not as brash as they say and he’s not as genteel as they say. I think it’s a case of easy pickings: the American investment banker and the English CEO. I’m tired of being a brash American.”
Varley nods. “The brash American and the stuffy Englishman,” he agrees. “I’ll tell you what. I’ll give you £10 if you don’t talk about my braces.”
Oops. Sorry John, it’s already in the piece. “And my love of the Boston Red Sox,” chips in Diamond. Then they start laughing again.
Actually, this is not just banal chatter. Varley and Diamond, who competed for the chief executive’s job when Matt Barrett vacated the seat nearly four years ago, have been in each other’s pockets for the past few weeks, flying the globe to tie up the company’s £4.5bn share issue, which involves investments by funds in Qatar, Singapore, China and Japan. The deal was announced on Wednesday but it has been a tense time in the run-up and any lack of unity would not have helped.
“We do get on well,” stresses Varley. “You can automatically tell how people get on. It’s not very difficult.
“There’s been a lot of mythology about this but I tell you, we would not have been able to achieve in Barclays what I think we have achieved over the last years if Bob and I hadn’t been able to work really well together. And it’s not just that we work effectively together; we enjoy working together.”
“We’ve travelled a lot,” adds Diamond with understatement. So how many sleepless nights were involved?
“The question isn’t how many days didn’t we get any sleep but how many days didn’t we get to a bed,” he laughs. And how many was that? “Too many.”
Fortunately, the two seem to have rehearsed for this challenge. Diamond reveals that back in 2000, when Varley was finance director and Diamond was chief executive of Barclays Capital, they decided never to take an issue that was unresolved between them into Matt Barrett’s office – something they kept to right through the former chief executive’s five-year tenure.
“That was the genesis of how well we work today,” he says. Varley is still on message too. “It’s really important when doing something like this that your lines of communication are short and effective,” he says.
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“Bob and I know how each other works. That kind of shorthand that you get from knowing each other and trusting each other is very valuable in the intense period of activity around a big transaction like this. We both draw strength from that.”
It is probably just as well, given the complexity of the task. The fundraising involves Japan’s Sumitomo Mitsui Banking Corporation investing £500m through a firm placing at 296p and Qatar Investment Authority, Qatari-backed vehicle Challenger, China Development Bank (CDB) and Temasek Holdings of Singapore backing a separate placing and open offer at 282p. The open offer is also available to other Barclays shareholders. There are still nearly three weeks of work needed for the offer to close and, though Barclays’ shares rose when the details of the much-rumoured fundraising were announced on Wednesday, those gains were all wiped out on Thursday. On Friday a leading analyst at Citigroup said Barclays could still have to raise £9bn because of feared further writedowns.
Varley says he needs to be “judicious” in what he says about how the investments with Barclays’ new friends were secured because “that’s the right way to respect relationships”.
Temasek and CDB came onto the Barclays shareholder register last year, taking stakes of 3 per cent and 2 per cent respectively. Now they’re being joined by Qatar Investment Authority, Sumitomo Mitsui and Challenger, a company representing the interests of Qatar Holding chairman Sheikh Hamad Bin Jassim Bin Jabr Al-Thani.