I believe that one genuine hero has emerged from the collapse of the British banking system. He is John Varley, the Barclays chief executive who this week proudly announced that his bank would not be taking government money to stay afloat.
I admire Varley because he has fought hard to keep one of the greatest names in British banking for more than 300 years independent and out of the hands of the State.
It is a hard fight and, who knows, he may yet fail. But at least Varley is doing his best. Fair enough. But it might have been very different had Varley had his way. That is, Barclays might look at what has happened to the Royal Bank of Scotland and shudder "There but for the grace of God, go we".
One of the questions arising from the wreckage of the British banking system is the extent to which decisions merely look terrible in hinsight and how much they were the consequence of hubris and stupidity at the time they were made. In the case of RBS, as I wrote on Friday, I tend towards the latter explanation. That is, RBS's pursuit of ABN-Amro looks hubristic in the light of the bank's decision to press ahead with the deal even once the parts of ABN-Amro RBS most wanted (LaSalle) were off the table.
But that doesn't let Barclays off the hook. After all, they wanted to buy ABN-Amro too and, had they succeeded, would surely have been left with the same mess RBS (and Fortis) discovered once they took control of the Dutch bank.
In February 2008, the Sunday Times reported that Barclays leadership was now
In other words, Barclays got lucky. They have survived by losing while RBS was undone by triumph. If Fred Goodwin hadn't been quite so good at putting a deal together, his bank might have survived as an independent institution and it might have been Barclays job to play the role of public whipping-bank. Or, to put it another way, the evidence that RBS were uniquely culpable is undermined by Barclays willingness to pursue exactly the same deal that ultimately destroyed RBS. Indeed, it might only be stretching matters a little to say that Barclays destroyed RBS. After all, it was Barclays that launched the war for ABN-Amro. Had they not done so, RBS might have kept its promise of "No More Acquisitions" since it would not have felt threatened by Barclays...“
under intense pressure after 12 turbulent months. Varley has seen his bid to take over Dutch bank ABN Amro trumped by a consortium led by Royal Bank of Scotland, thwarting his ambition to make Barclays one of the world’s top five banks.
Which is to say that hubris and stupidity are only part of it. Luck matters too.