Martin Vander Weyer’s Any Other Business
Bob Diamond, the generously remunerated American president of Barclays, has been put through his paces so often in this column that we really ought to give him his own treadmill in the Any Other Business penthouse gym. But I make no apology for mentioning him again — and this time, instead of making him my comedy stooge, I’m going to stand up for him. He came under attack last week from both George Osborne (‘It really beggars belief that two years after we all bailed them out, we get the Barclays bank chief paying himself £63 million’) and Lord Mandelson (‘If you look at Bob Diamond, who took £63 million in pay — that to me is the unacceptable face of banking. He hasn’t earned that money…’). Barclays described the figure of £63 million as ‘a wilful distortion’, while the Guardian conjured a figure somewhere near £60 million, apparently by adding together everything Bob has earned in performance-related pay schemes dating from 2004, everything he might earn between now and 2013, and the £27 million he took from the sale of his shares in Barclays’ asset management arm.
Well, here’s the thing: the precise numbers in this argument really don’t matter, because every reasonable person outside the City recognises Diamond and his ilk are paid far more than they merit for what they do, even when they do it well — and that, perversely, the more they expect to be paid, the greater the danger they will eventually provoke another financial catastrophe. That’s a problem which somehow has to be addressed if the financial sector is ever to achieve long-term stability. But Bob is not a villain of the banking collapse; I hesitate to call him a hero, but his so-far hugely profitable acquisition of the wreckage of Lehman Brothers, for barely more than the cost of the buildings it occupied, has been described (in The Devil’s Casino, Vicky Ward’s entertaining account of Lehman’s rise and fall) as ‘the deal of the century’. What’s more, he has been in post at Barclays for longer than Gordon Brown has been in Downing Street, and it’s not hard to say which of the two has better sustained both his professional reputation and the loyalty of his colleagues. After all, it wasn’t trader Bob who (as Sir John Major has just reminded us) lost the taxpayer more than £6 billion by selling a mountain of gold at the bottom of the market.
As for Mandelson’s casual jibe that Diamond has ‘taken £63 million not by building business or adding value or creating long-term economic strength, he has done so by deal-making and shuffling paper around’, it’s worth remembering that the paper Bob is highly skilled at shuffling around includes government bonds and foreign exchange contracts. Labour ministers will repeatedly lash out at the greedy-bastard-banker-Bob archetype during the election campaign: it’s an obvious tactic if you’ve got nothing else to offer. And since overpaid Bob himself now operates mostly from New York, I don’t suppose he’ll be too bothered. But George Osborne would be well advised to resist the temptation to take any more cheap potshots because, when global buyers of UK government debt go on strike and the pound falls off a cliff, it’s the likes of Diamond whom the next Chancellor will need on his side.
Net-a-Manger
Much has been made of Natalie Massanet’s £50 million haul from the sale of Net-a-Porter, the high-end online fashion retailer she founded ten years ago, to Richemont, the Swiss luxury goods giant. But the deal, which values London-based Net-a-Porter at £350 million, barely counts as a ‘British dotcom triumph’, since Natalie herself was born in Los Angeles, the daughter of a Hollywood publicist and a Chanel model, and brought up in France. A decade after the dotcom bubble, in fact, there are hardly any British dotcom triumphs at all. Most of the internet-related companies that shot into the FTSE 100 have disappeared; and the only enduring, native-born ‘star’ of the sector is Martha Lane Fox, who long ago gave up running lastminute.com, the online travel agency, and is now a non-executive director of Channel 4 and Marks & Spencer. No, the Brits missed the dotcom wave, and turned out to be much more talented at the low-tech task of running sandwich shops. Pret-a-Manger — now in New York, Washington and Hong Kong — was also valued at £350 million when it was sold to the Bridgepoint private equity partnership two years ago. Now the rival EAT chain, founded in 1996 by former banker Niall MacArthur and his wife Faith, is about to sell itself to Waitrose for around £100 million. Both the World Wide Web and the idea of eating meat between slices of bread were dreamed up by Englishmen (respectively Sir Tim Berners-Lee and John Montagu, 4th Earl of Sandwich) but of the two, our entrepreneurs still seem to be much more excited about the 18th- century invention.
I’d vote for Ryanair
I’m composing this item in my head on a crowded Ryanair flight from Bergerac to Stansted. It would be physically impossible to type it, because the rigid plastic seat-back in front of me is too close for me to open my laptop — and anyway the flight attendants (Irish and Polish) keep interrupting, trying to sell me snacks, scratchcards, phonecards, perfumes, train tickets to London and ‘smokeless’ cigarettes. I hope their rock-bottom wages minus the cost of buying their own uniforms are offset by commission on in-flight sales. The ruthless Ryanair business model has become almost a caricature of itself — a flight quoted at £22.99 costs you more than £90 by the time you’ve ticked all the boxes in the online booking system, rising to £125 at the gate if you try to board with a second item of hand luggage, even if it’s only your duty-free shopping. But that’s still a cheap flight, with a better than 90 per cent chance (so the PA system declares, with a comic fanfare, as we land) of arriving on time. As a result, the airline that systematically rejects conventional notions of respect for the customer now has a market capitalisation almost twice that of beleaguered British Airways and expects to report profits for the year to March of £275 million, while BA clocks up giant losses. No wonder Ryanair’s Michael O’Leary was willing to drop his customary in-your-face animosity and express sympathy for fellow countryman Willie Walsh of BA during the recent strike. I’ll vote for any politician who can work out how to apply Ryanair principles to the running of public services.
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