If I say that Bob Diamond richly deserves his promotion to chief executive of Barclays, I do not intend any snide reference to the fact that he is enormously rich.
If I say that Bob Diamond richly deserves his promotion to chief executive of Barclays, I do not intend any snide reference to the fact that he is enormously rich. The giant fortune he has amassed in bonuses during 12 years at the helm of Barclays Capital, the group’s investment banking arm, is held against him by his detractors — among them Business Secretary Vince Cable, who once told me he regarded Diamond as ‘the most grievous example’ of City greed and insensitivity to public feeling. But you don’t have to love Bob to admire him for having built an extremely robust and profitable trading business for Barclays during an era of unprecedented market turmoil. His bargain-priced acquisition of the rump of Lehman Brothers in 2008 turned out to be the deal of the decade, and his division chipped in £3.4 billion of the group’s £4 billion half-year profits last month. He may have been paid a lot more than any employee should ever be paid, but Bob is still entitled to our respect — not least for his stamina. Last time I talked to him, on the phone to New York, I interrupted a rant about the benefits of buying Lehman to ask him how he keeps up the pace: ‘I recall my dad saying about me once that the only time he’d ever heard me say “never” was when I was asked if I’d had enough. I love the challenge, Martin, I love the business.’
Diamond succeeds John Varley as chief executive next March, and the City waits to see what Varley, who will be just short of his 55th birthday, will do next. Might he succeed Marcus Agius (coming up to 65) as chairman of Barclays? In corporate governance terms these days, that would be deeply incorrect — chairmen are almost invariably recruited from outside, though I’ve never understood why. On top of the politically incorrect Diamond promotion, it might be too much for shareholders to sanction. But Varley, a gentlemanly operator who is something of a hero to my City generation, deserves another big job. The timing is too tight for him to be a candidate for the chair of HSBC (whose incumbent Stephen Green is leaving to become trade minister), but perhaps he could slip in to the Bank of England as heir apparent to Mervyn King, upstaging the ambitious deputy governor Paul Tucker. Watch this space — and watch also for Diamond’s successor at Barclays Capital. One internal candidate might have been invented purely to annoy Vince Cable: he rejoices in the name of Rich Ricci.
The Whopper’s new home
I wasn’t sure what to make of the fact that an item headlined ‘Burger King agrees to $3.3 billion sale to 3G Capital’ on Reuters’ US website attracted more readers than ‘God did not create the universe, says Hawking’. Does the sale of a fast-food brand really deserve such attention, even if it is the world’s second largest after McDonald’s? Well, as Stephen Hawking might say, yes and no: a new owner for the ubiquitous chain may be no more exciting to you and me than a new formula for the Double Whopper, but the deal illustrates, in several ways, how money flows today and how it flowed a generation ago. The buyer is a private equity firm whose principal, Jorge Paulo Lemann, is a Brazilian worth $11 billion — and Brazil is one of the BRIC countries (with Russia, India and China) whose super-rich are snapping up strategic assets in the West. Secondly, the deal is an indication that private-equity players generally will be hunting for businesses to buy this autumn, after an extended period of sitting on their cash, and that they are able once again to raise debt to do so: JP Morgan and Barclays are reported to have financed 3G to the tune of $2.8 billion.
And in passing, let’s not forget that Burger King was once an illustration of British strength in international capital flows. The home of the Whopper 20 years ago was a palatial suite in St James’s Square — occupied by Lord Sheppard, head of Grand Metropolitan, the hotels and pubs group which followed the fashion set by Hanson for high-profile acquisitions in the United States. GrandMet bought Pillsbury, of which Burger King was part, and had some initial success driving the brand forward as a serious competitor to the Golden Arches. But after GrandMet and Guinness became Diageo in 1997, fast food became peripheral to what was essentially by then a booze business — and the unloved Burger King was sold to a group of American investors who floated it on the stock market and have now sold out to the Brazilians. If Reuters had combined the two stories by seeking a comment from Professor Hawking on the Burger King sale, he might have observed that it shows us how the corporate universe, like the cosmos, is forever changing shape. But does that prove there isn’t a God?
Bon route
I remember a phrase from an obituary of Professor Richard Cobb, the historian of modern France who died in 1996. His idea of a holiday, it said, was ‘to take a long time getting from St Etienne to Clermont-Ferrand’. I know exactly what he meant. There is a special pleasure in following almost empty secondary roads across the pages of the Michelin atlas: my own meandering last week took me to Millau, to see the viaduct over the Tarn designed by Norman Foster and engineered by the doyen of French bridge-builders, Michel Virlogeux. Opened in December 2004, this E400 million masterpiece of structural simplicity enables drivers to take a little less time getting from Clermont-Ferrand to Narbonne. But given the paucity of traffic on that route, other than at either end of the summer holidays, the project really had no economic justification at all. It was just a stupendous showing-off of what the French (with the help of a British architect) can do, and there’s no wonder Jacques Chirac looked so smug in pictures of the opening ceremony.
Still, great engineering has the power to boost the non-economic quantum of ‘general wellbeing’ — to lift the soul, in other words — and the draw of the viaduct has turned the town of Millau, once just a place to buy a car picnic on the way south, into a destination in itself. I recommend a stopover at the pleasantly faded Château de Creissels, with a view of the night-lit viaduct from its dining terrace. As the Michelin guide used to say, vaut le détour.
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