The strangest bank of all

Barclays first defied the Treasury by refusing to take its money. Now it won’t join the Chancellor’s

The gathering of Barclays investors at the Queen Elizabeth II Conference Centre in Westminster on 23 April was inevitably a strange affair. At one and the same time, the bank has managed both to infuriate its investors and to win their admiration.

The patrician leadership of the bank, headed by the former dealmaker Marcus Agius (married to a Rothschild) and John Varley (who married into one of the Barclays-founding Quaker families), has fought with tooth and claw, as the credit crisis descended on the financial system, to keep HM Treasury off its back. While Lloyds Banking Group (the old Lloyds TSB plus HBOS) and Royal Bank of Scotland (RBS) have allowed themselves to fall under direct rule from UK ­Financial Investments – the arm of government set up to own shares in the semi-nationalised banks – Barclays chose a different direction. It has been a case of taking money from anyone, at any price, as long as the interference from Labour and Whitehall can be kept at bay.

The anger from long-term Barclays shareholders (the pension funds and insurance giants who dominate investment decisions in the City of London) stems from last October’s decision by Barclays to eschew an injection of cash from HMG to solidify its crumbling balance sheet, and to look overseas instead. Using a rum collection of intermediaries, including the glamorous ­financier Amanda Staveley (a former girlfriend of the Duke of York), it secured for itself £7.3bn of new capital from the ruling royals in the Gulf statelets of Abu Dhabi and Qatar. It paid an enormous price for this injection of funds, some 14 per cent at a time when official interest rates are close to zero, and in effect gave away 15.5 per cent of the bank to new investors without first asking the permission of the existing owners, the long-term City investors. It was this abandonment of so called “pre-emption rights” that cast Agius and Varley as the City bad boys who should be excluded from class. So great was the anger that the Barclays board had to reopen the fundraising, offering shares to existing investors on similar terms and promising that the bank’s directors would submit their appointment to an annual vote of approval by shareholders. This was a big extension of normal shareholder democracy.

So why did Barclays go to so much trouble to preserve its independence? It was partly about pride and partly about ambition. Barclays is unique among the big names on the high street. The bank, which traces its history on Lombard Street back to the late 17th century, was formed as a result of a series of mergers a century later, which brought together banks from the English regions controlled by wealthy Quaker families.

Even though the founders have very few shares in the modern bank, somehow over the centuries, members of the extended families have managed to pop up in the top jobs. John Varley, the quintessential English solicitor who currently holds the job of chief executive, just so happens to be married to Carolyn Thorn Pease, a descendent of one of the founding Barclays dyn­asties. It used to be said that in the chairman’s ­office at Barclays, there was a secret register that monitored the progress of family members through the bank and fast-tracked their progress. Whatever the truth, this legacy – in which Quaker names such as Tuke, Pease and Buxton, crop up over the years – is decidedly different from that of the other high street banks.

Few bankers are so gripped by history as Varley. His predecessors were forced to retreat from apartheid South Africa in 1986, where Barclays was among the biggest players, by a combination of sanctions and shareholder activism. But when the opportunity to return presented itself nearly two decades later, Varley grabbed it with both hands, spending £2.9bn in 2005 on buying Absa, the biggest retail bank in the country. The honour of his predecessors had been restored.

The second big difference and reason for Barclays wanting to stay independent is its embrace of a US-style investment banking culture. Much of the current debate about the future of banking has been whether there should be new rules that prevent old-style Captain Mainwaring bankers joining up with the “casino” bankers who caused the credit crunch. More than any other UK bank, Barclays is a combination of both.

Barclays Capital, run by Bob Diamond who pocketed a £21m salary in 2007, embraced casino banking with great zeal, turning BarCap into a powerhouse of the debt and bond markets. Indeed, it is one of the biggest players in the securitised debt market – the slicing, dicing and packaging of loans at the heart of the credit crisis. This involvement in securitised debt, including sub-prime mortgages, has cast a large shadow over Barclays, which always claims that the mortgage debt it holds is of a “better vintage” than that of its rivals.

But Diamond’s ambitions are without limit and he has seen the credit crunch as an opportunity rather than a drag on the bank’s activities. When Lehman Brothers went under last September, BarCap saw it as an opportunity and moved to buy up Lehman’s New York staff and offices at a knockdown price.

In more recent days, Barclays has been studying whether it, like RBS and Lloyds, should become part of Alistair Darling’s insurance plan for banks: the “asset protection scheme”. Under this insurance policy, the Treasury essentially takes the toxic or bad debts off bank balance sheets in exchange for a premium. Barclays looked carefully at the plan and decided that, if it did so, it would lose the freedom to lend to whom it wants, and perhaps, as importantly, set its own wages and bonuses for staff. So it has decided to stay out and soldier on.

Once again, it has chosen to sell assets to raise the capital it needs to stay independent – on this occasion iShares, part of its investment arm. It will almost certainly mean higher losses in the short term since, unlike the banks with insured toxic debts, Barclays will have to take the direct hit through its profit and loss account.

No one wants to see the return of the bad old days when bankers ran riot. But it is hard not to have a sneaking admiration for Agius, Varley and Diamond. They place the independence of their bank above all else, and are determined not to cast off three centuries of history. It’s a bold gamble that sets Barclays apart from the crowd.

Alex Brummer is City editor of the Daily Mail

This article first appeared in the 27 April 2009 issue of the New Statesman, Rise of the Geek

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An English hero for the ages: Ian Botham at 60

Botham blends his sportsmanship and deep-seated passion for cricket with a lust for life.

Begging W H Auden’s pardon, it is possible both to honour and to value the vertical man, and in the case of Ian Botham, who turned 60 on 24 November, it is our bounden duty. No sportsman has given Britons so much to enjoy in the past half-century and no sportsman is loved more. Two decades after he retired from first-class cricket, his reputation as one of life’s champions remains unassailable.

No mere cricketer is he, either. Botham is a philanthropist, having raised more than £12m for various charities, notably Leukaemia and Lymphoma Research. In December, 30 years after his first walk from John o’Groats to Land’s End, he will set off again, in South Africa, where England are on tour. And he really does walk, too, not amble. As somebody who accompanied him on one of his dozen walks said: “You can’t keep up with him. The man is a phenomenon.”

Of all postwar sportsmen, only Bobby Charlton and, at a pinch, Henry Cooper come close to matching Botham’s enduring popularity. But Charlton, a shy man who was scarred by the Munich plane crash of 1958 (and may never have recovered from its emotional effects), has never comfortably occupied a public stage; and Cooper, being a boxer, had a solitary role. Botham, by contrast, spoke for England. Whenever he picked up his bat, or had a ball in his hand, he left spectators in no doubt.

Others have also spoken for England. Bobby Moore and Martin Johnson, captains respectively of England’s World Cup-winning football and rugby teams, were great players but did not reach out to people as naturally as Botham. Nick Faldo, Lester Piggott, Sebastian Coe and, to bring us up to date, Lewis Hamilton have beaten the best in the world, but they lacked those qualities that Botham displayed so freely. That is not to mark them down. They were, and are, champions. But Botham was born under a different star.

It was John Arlott, the great cricket commentator, who first spotted his uniqueness. Covering a match at Taunton in 1974, he asked the young colt to carry his bags up the rickety staircase to the press box, where Arlott, wearing his oenophile’s hat, pulled out a bottle of red wine and invited Botham to drink. Forty years later Botham is a discriminating wine drinker – and maker. Along with his friend and fellow England great Bob Willis, and their Australian wine­making pal Geoff Merrill, he has put his name to a notable Shiraz, “BMW”.

Arlott, with his nose for talent and good company, saw something in the young Botham that Brian Close, his captain at Somerset, was beginning to bring out. Later, Mike Brearley, as England captain, drew out something even more remarkable. As Rodgers and Hammerstein wrote, you’ve got to be carefully taught. And Botham, a fine team man as well as a supreme individual performer, has never withheld praise from those who enabled him to find his voice.

If sport reveals character, then cricket is the game that reveals it most clearly. In no other sport is the individual performance rooted so firmly in a team context. Every over brings a contest of skill and intelligence between batsman and bowler but only a team can win the match. “A cricketer,” as Arlott said, “is showing you something of himself all the time.”

Cricket also reveals national character more than any other sport. Football may be the most popular game in the world but cricket, and cricketers, tell us far more about England and Englishness. It is instructive, in this regard, to hear what Philippe Auclair, a French journalist and author long resident in London, has to say about Botham: “He is essentially an 18th-century Englishman.” In one! It’s not difficult to sense a kinship with Tom Jones, Fielding’s embodiment of 18th-century life, who began his journey, as readers may recall, in Somerset.

A country boy who played for Worcestershire after leaving Somerset, and who lives by choice in North Yorkshire, Botham is an old-fashioned Englishman. Although nobody has yet found him listening to the parson’s sermon, he is conservative with a small and upper-case C, a robust monarchist, handy with rod and gun, and happiest with a beaker in front of him. He represents (though he would never claim to be a representative) all those people who understand instinctively what England means, not in a narrow way, but through something that is in the blood.

Above all, he will be remembered for ever as the hero of 1981. Even now it takes some believing that Botham bowled and batted with such striking success that the Australians, who were one up after two Tests, were crushed. Some of us who were actually at Headingley for the famous third Test – thousands who claim to have been there were not – recall the odds of 500-1 on an England victory going up on the electronic scoreboard that Saturday evening.

Botham made 149 not out as England, following on, beat the Aussies by 18 runs. For three hours the country seemed to stop. In the next Test, at Edgbaston, Botham took five wickets for one run as Australia fell under his spell. Then, at Old Trafford, on a dank Saturday afternoon, he played the most memorable innings of his life and one of the greatest innings ever played by an Englishman: 118 magnificent, joyful runs. Joy: that’s the word. Botham brought joy into people’s lives.

Yet it was the final Test at the Oval, which ended in a draw, that brought from him a performance no less remarkable than those from before. He bowled 89 overs in that match, flat out, continuing to run in when others withdrew with injury. That was the team man coming to the fore. Little wonder his comrades thought the world of him.

Modest, loyal, respectful to opponents, grateful to all who have lent him a hand, and supported throughout a turbulent life by Kath, his rock of a wife, and their three children, this is a cricketing hero to rank with W G Grace, Jack Hobbs, Wally Hammond and Fred Trueman. A feature in the lives of all who saw him, and a very English hero. 

This article first appeared in the 26 November 2015 issue of the New Statesman, Terror vs the State