Colby Magazine

Volume 96 Issue 2 Fall 2007 Article 8

October 2007

The Natural: How one high school football star, economics major, ex-IT manager, Red Sox fan, proponent of a "no-jerks" policy, and kids' baseball coach has risen to the top of international banking

Gerry Boyle Colby College

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Recommended Citation Boyle, Gerry (2007) "The Natural: How one high school football star, economics major, ex-IT manager, Red Sox fan, proponent of a "no-jerks" policy, and kids' baseball coach has risen to the top of international banking," Colby Magazine: Vol. 96 : Iss. 2 , Article 8. Available at: https://digitalcommons.colby.edu/colbymagazine/vol96/iss2/8

This Contents is brought to you for free and open access by the Colby College Archives at Digital Commons @ Colby. It has been accepted for inclusion in Colby Magazine by an authorized editor of Digital Commons @ Colby. 26 COLBY / FALL 2007 How one high school football star, economics major, ex-IT manager, Red Sox fan, proponent of a “no-jerks” policy, and kids’ baseball coach has risen to the top of international banking

Story by Gerry Boyle ’78 Illustrations by Robert P. Hernandez

n the world of banking, Bob Diamond ’73 is a Yes, Bob Diamond is a very big deal. So, why start big deal. this profi le of him with a garden shed? The president of London-based Barclays Group, Diamond, 56, is the architect of an investment and management strategy and philosophy that has produced record profi ts (more It was the mid-1970s and Diamond was in graduate than $4 billion last year) for Barclays’ investment school at the University of Connecticut getting banking arm, which, as its chief executive, he has his MBA. One of his professors there, Jack Viega, turned into one of the industry’s hottest. mentioned that he was looking for someone to In past months, Diamond has been a point man build a garden shed. Diamond, with some carpentry in Barclays’ takeover bid for ABN Amro, the Dutch experience, gave his professor an estimate that landed bank. The bid on the table was worth more than $90 the job. billion, and would create the world’s fi fth-largest bank, And then Diamond was back, saying the estimate combining two already vast global fi nancial networks. he’d given was too low. But rather than make excuses Beyond the world of fi nance, Bob Diamond may or try to blame it on the client, Diamond took not be a household name in the United States. But responsibility and addressed the situation head-on. he’s a go-to guy for the UK media. Most recently his Viega remembers him saying, “‘Look. I screwed up. I comments on the downturn in the markets stemming didn’t estimate it right.’ … He’s an honest guy. That from sub-prime mortgage failures went worldwide on was what impressed me most. Something he did in the news wires. that situation and how he behaved.”

COLBY / FALL 2007 27 It’s an obscure footnote in the story of Diamond’s ascent in the world of international fi nance. But besides documenting one of Diamond’s few fl awed business decisions, it reveals a signifi cant character trait. The intent here is to consider who Bob Diamond is and just what has enabled him to rise to the top of an industry in which everyone is ambitious. Most are very smart. The vast majority are hard working to a fault. So, why Diamond? Clue number one: “There was an immediate chemistry,” Viega said. ”I trusted him.” He isn’t alone, as conversations with PHOTO COURTESY OF BARCLAYS Diamond’s colleagues, family, and friends Barclays President Robert Diamond ’73, center, meets with colleagues in his offi ce in Barclays Capital revealed the same sort of bonding. Many headquarters in the Canary Wharf section of London. In the background are family photos-and people consider Diamond their friend. framed newspaper clippings proclaiming victories for teams in Diamond’s hometown of Boston. In Viega’s case, that trust led him to invite Diamond to teach in the UConn business school the year after he received bused from Boston to outlying communities, (most from Diamond’s record-breaking his MBA. If the saying “the apple and the Diamonds volunteered to be a host investment, Barclays Capital, Barclays doesn’t fall far from the tree” applied family for a bused student. Global Investors, and Barclays Wealth) made here, Diamond would have remained an For Robert Diamond Sr., Martin Luther the Barclays’ offer more valuable over time. academic, an educator like his dad, Robert King was “a real hero,” Rue Diamond said. “We went into this transaction expecting Diamond Sr. When Bob Diamond Jr. talks about to be able to execute, and we are still quite The elder Diamond was a teacher and heroes, he points to his dad. confi dent that we can,” Diamond told an administrator in Massachusetts public Diamond has said this in print and he interviewer from CNBC in June. schools, serving as superintendent in said it again in an interview with Colby in This statement alone, picked up by the Concord, where his son and namesake went his Canary Wharf offi ce in London earlier news wires and relayed around the world, to school, and, at the end of his career, as this year. “My father always said, ‘Every was enough to trigger a bump in Barclays principal of the junior-senior high school day, you have to learn some and teach some.’ stock. When Diamond talks, to borrow a on Nantucket. Bob Jr. was the second I’m a fi rm believer in that to this day. I learn phrase, the world fi nancial markets listen. of seven children, raised in a household every day, and I teach every day.” Not bad for a self-described Boston boy overseen by his mother, Anne Diamond. His father, Diamond said, equipped him (his offi ce is fi lled with Red Sox and Celtics Of the Diamond siblings, four have been with a strong ethical code and the moral memorabilia) who began his post-MBA or are teachers. A sister, Marita, works with foundation that underlies it. That code career working a third-shift tech job and autistic preschoolers. A brother, David, applies to his professional life as well, he who claims to have gone into the business teaches in a small town in upstate New said. “No gray area. No fudging. We have world to give himself street cred with his York. A brother, Richard, owns restaurants to live by the rules.” MBA students. on Nantucket. A younger sister, Rue, went Though Robert Diamond Sr. passed The night-shift tech job was Diamond’s to school for nursing. away 25 years ago, his son continues to use choice, as was a decision to jump from an Rue Diamond describes her parents his father as a sounding board. “I still can administrative track at Morgan Stanley as “you-can-do-anything-you-set-your- have a conversation with him when I’m to the high-pressure trading fl oor. mind-to kind of people” and “very positive facing a tough decision,” Diamond said. Now Diamond oversees, among other people.” Her parents didn’t push any And does he have those conversations? operations, a rapidly expanding investment of their children into education or into “Every day,” he said. banking operation, with more than 13,000 anything else for that matter. They did, she The tough decisions Diamond considers employees at Barclays Capital alone, more said, make sure to teach certain values. these days have high stakes. As this story than double the number in 2003. Barclays, Rue Diamond said her mother, Anne, now was being written, he and other Barclays with more than 130,000 employees, 80, often talked about not understanding executives, including Chief Executive draws talent from around the world, and how anyone would discriminate against Offi cer John Varley, were going all out to its scope is increasingly global as world another person because of their sexual win the takeover battle for ABN Amro. A markets, once insular, meld into a complex, orientation. Concord, then as now, was an Royal Bank of Scotland offer was also on the organic structure that is at once fi nancial, affl uent Boston suburb, and not very diverse table, but Diamond and his colleagues were economic, and political. economically or racially. In the 1970s, court- arguing that Barclays recent strong earnings Succeeding in this intensely competitive ordered school desegregation saw students

28 COLBY / FALL 2007 world of international fi nance is a fervent UConn, said Viega, who taught business believer in liberal arts education, who, with courses in organizational behavior. Not his wife, Jennifer, moved daughter Nell to only did Diamond master the material an American-style high school in London (exploring notions of meritocracy in when the English school she was attending, “My father always said, business organizations, a principle in keeping with the British education ‘Every day, you have to learn that remains one of the tenets of his system, tried to narrow her options. management philosophy today), but he also “Some people know right away what some and teach some.’ I’m a excelled in classroom exercises that focused they want to do,” Diamond said. “Others fi rm believer in that to this day. on students’ leadership skills. “That’s when take longer.” I learn every day, and I teach you see how the other peers interact with When did he decide? them,” Viega said. “And the thing that “I still haven’t decided,” he said, every day.” I remember vividly about Bob was that grinning. Then he added, “Actually, I fell people really looked up to him. He was just into it accidentally.” —Bob Diamond ’73 a natural leader to the group.” The natural leader didn’t move into he same could be said of Diamond’s management from UConn, however. Tdecision to attend Colby. Instead he was hired by Bill Cooke, then He was “the younger brother in the head of IT at U.S. Surgical. While his back seat” when his parents took his classmates were opting for jobs with more sister Christine to see colleges. Christine models in the frat house, but Diamond was prestige and bigger paychecks, Diamond Diamond didn’t end up at Colby, but her absorbing them in the classroom. chose a training program geared more younger brother made his decision then and “You have people who do have the for entry-level employees with bachelor’s there—when he saw the athletic facilities, he immediate grasp of economic analysis,” said degrees than for newly minted MBAs. said. Hank Gemery, Pugh Family Professor of “I believe Bob got one of the lowest A star linebacker on the Concord- Economics, emeritus. “They just fall right paying jobs out of all the graduates of the Carlisle High School football team, into it.” UConn MBA program,” Cooke said. “He Diamond was also a top student And Diamond? liked the conceptual design of the program, academically, intensely competitive on “A very quick grasp,” Gemery said. which was you start really low and you’re the fi eld and in the classroom. Said his “That was apparent right at the start.” constantly pushed to learn more and sister, Rue, a freshman at Concord-Carlisle Several of Gemery’s students have more and more and to be able to take on High when her older brother was a senior, gone on to great success in fi nance—the additional responsibility. I think his fi rst job “Although I sort of sit and shake my head late Edson Mitchell ’75, who transformed was third-shift computer operator.” and say, ‘How can this be my brother?’, I’m Deutsch Bank before his death in a plane But Diamond didn’t stay on the third not surprised that Bob has achieved what crash in 2000, comes immediately to mind. shift for long. he has achieved. He has been an extremely But, while he expects his strongest students He learned how to program and within intense person his whole life.” to perform very well professionally, Gemery three months was running all three shifts Diamond went off to Colby and as a said it is diffi cult to know who will rise in the computer room. That was followed fi rst-year was assigned to a vacant room in to the top of fi nancial institutions, where by a year running customer service. the Phi Delta Theta fraternity house. He grasp of economic concepts and markets Then Cooke left U.S. Surgical for Wall ultimately pledged the fraternity, played gets you in the door but not to the corner Street, where fi rms were moving into new varsity football and freshman baseball (an offi ce. As Gemery points out, running an technology. Diamond went with him. “He injury ended his sports career sophomore investment bank also requires the ability to was the fi rst guy I took to Morgan Stanley,” year), and established friendships that build a team. “It’s not a solo performance,” Cooke said. have continued ever since. Phi Delt, as he said. Diamond ran the administrative end it was known, had a jock faction and a Another clue, this one from fraternity of IT at Morgan Stanley for a year. Then hippie faction, said Jeff Lawrence ’72, and brother Lawrence. He and Diamond shared the chief fi nancial offi cer needed an Diamond leaned toward the jocks—and a passion for the Red Sox, he said, and administrator and Cooke recommended the books, though unobtrusively. “I know enjoyed a social life that revolved around Diamond. After two years with the CFO, the fi rst time I paid attention to him weekend frat parties, as was generally the Diamond moved to the trading fl oor, academically was when I went down to see case in that era at Colby. But Lawrence working in government bonds. It was a big him and he was hitting it out of the park also recalls that Diamond had a gift for jump, one that put him at the bottom of the at UConn,” said Lawrence, now a lobbyist drawing people to him. “I always thought it ladder in a job with a very different skill set. for the aerospace industry. “I was kind of was the Irish gift—these guys who are glib Diamond said the trading fl oor taught struck by it because I never thought of him and have a very embracing personality like him the necessity of taking risks to succeed. as a bad student or a good student. I just Bob always did. You always wanted to hang “It’s easier there because you don’t always thought of him as my pal.” around with him.” succeed, you’re not always right,” Diamond That pal may not have talked economic It’s a quality that followed Diamond to said. “But you don’t make the same mistake

COLBY / FALL 2007 29 twice.” what we had then was an underperforming, He didn’t, and for a decade, he continued subscale investment banking capability. And moving upward professionally, running what we have today is an outperforming Morgan Stanley’s bond trading in Europe, world leader. That’s quite a transformation in managing all of First Boston’s operations “When he joined Barclays, ten years. And Bob has personally led that.” in Asia. It was about this time that Cooke, How? Diamond’s mentor, fi rst saw him in action, which was about ten years ago, “A compendious knowledge of the not as a protégé but as a full-fl edged senior I think that what we had then industry,” Varley said, without hesitation. manager. “I was very impressed,” Cooke was an underperforming, And then he went on, crediting Diamond’s said. He remembers thinking, “Holy shit. sound strategic outlook, demanding He’s really matured. He’s good at this.” subscale investment banking performance ethic, fl air for talent Cooke was so impressed that, instead of capability. And what we have development. And a fervent belief in a retiring in 1997, he went to London performance-driven meritocratic culture, to join Diamond at Barclays. So, what today is an outperforming one that has been inculcated not only makes Diamond such a good manager? world leader. That’s quite a at Barclays Capital but across the entire Cooke broke it down into fi ve points. transformation in ten years. Barclays organization. A clear-sighted sense “One, you have to listen,” he said. “You of business purpose, and a pioneering sense can’t have the type of ego a number of And Bob has personally led that.” of business focus. people have where, because they’re in a “It’s that combination of attributes,” particular position, they believe they know —Barclays Chief Executive Varley said. “They make him a good it all. Bob’s a very good listener. Offi cer John Varley businessman. You have to be a very good “Two, he’s very honest. And it’s always businessman to pull off what he’s pulled off good to work with somebody who is honest. at Barclays Capital.” Being honest is always very diffi cult. Bob’s Diamond’s success has spread good at delivering diffi cult messages as well his reputation beyond the world of as constructive messages. international banking—especially in “Three, he’s smart. So he’ll get people’s reward performance, meritocracy starts at London, where the press tracks top respect because he’s smart. the top. “And clearly, all of the executives executives in The City, London’s fi nancial “Four, he has a lot of energy. He works who have succeeded are ones who believe district. Much of the attention directed at hard. He sets the pace. in it also,” Cooke said, “who believe in real Diamond has focused on his compensation “Five, he believes, as I do, that culture competence, who are willing to get rid package, which, with Barclays Capital’s and a meritocracy are very important. By of people who don’t perform. No, ‘don’t phenomenal run, has topped $20 million culture, that means you may produce a lot perform’ is wrong. Who perform average. annually. That has led to criticism from of revenue but you’re [a jerk]. We should We really don’t want average guys. We want some in the press that Diamond has opened fi re you.” exceptional guys.” the door for American-style executive This isn’t as easy as it sounds, Cooke Those exceptional people—including compensation in Britain. pointed out. the one at the top—have helped to produce Varley steadfastly defends the bank’s “You’re under constant pressure for exceptional results. compensation packages as both deserved numbers on Wall Street, because we get For 2006, pre-tax profi ts for Barclays and essential to attracting and keeping paid so well. When you’re willing to cut ties Capital, which Diamond heads, were up the best talent in what is an increasingly with someone simply because they’re a jerk, 55 percent, while Barclays’ overall profi t competitive and global industry. “I think and you’re willing to take a revenue hit, that was up 35 percent. And, according to John there are times when opinion formers in takes a lot of courage,” he said. Varley, Barclays group chief executive and Britain … are equivocal about wealth and In 1996 Diamond brought his no-jerks Diamond’s boss, 2007 was off to a strong wealth creation,” he said. “Not only are policy and meritocratic philosophy to start, with fi rst-quarter profi ts up 15 we in a goldfi sh bowl here because of the Barclays de Zoete Wedd (BZW), the percent over last year. Barclays Capital had fact that we are a leading player in the moribund Barclays investment operation. its strongest quarter ever. British fi nancial services industry, but we’re Diamond ran counter to the prevailing Merger or no merger, Barclays is poised also in a goldfi sh bowl because there is an wisdom, moving away from the then- to take advantage of an expected surge in obsession about compensation in the United booming equities market into fi xed income. corporate fi nancing through capital markets Kingdom.” There were doubters, but the gamble paid in Europe and Asia. Some may doubt the value of bringing off and the foundation was laid for what Varley gives much of the credit to the best and brightest to London, Varley would become Barclays Capital. Diamond. said, but he is not among them. Shaping the organization has, in “I think he’s been the progenitor of “I want to ensure that London in general Diamond’s case, involved removing several [Barclays Capital’s record performance],” and Barclays in particular can attract the direct reports, including members of Varley said. “When he joined Barclays, best people in the world to work with us executive committees. In organizations that which was about ten years ago, I think that on our strategy and vision over the course

26 COLBY / FALL 2007 with a grin, “And it allows them to grow up How does he fi nd time? as devout Red Sox fans.” “The week ends Friday night,” Diamond It isn’t all Boston sports in Diamond’s said, gesturing toward the team pictures. offi ce. There is a framed front page of “All of this takes place on Saturday and the Colby Echo, the issue that bid farewell Sunday. You don’t have to let your career to former President William R. Cotter, take over your life if you don’t want it to.” Diamond’s friend. There are photos of Diamond had arranged a meeting for the Diamond, his wife Jennifer, their three writer later that week with Bill Mules, the children: Rob, Nell, and Charlie. head of the American School in London in Though he now has dual citizenship— St. John’s Wood, where daughter Nell was U.S. and UK— Diamond is unabashedly a senior and son Charlie was a sophomore. American. In fact, when Lawrence visited (Rob graduated from Princeton in the him in London recently, he was pleased spring.) Mules gave a tour of the facilities, to learn that Diamond hadn’t acquired an punctuating it with anecdotes about the English accent, “like Madonna.” Diamonds’ involvement in school life. “He sounds just like my old boy,” There was the time Diamond made Lawrence said. “That shows a good bit of sure to fl y right back from an economic self-confi dence.” summit at Davos because he and Jennifer Still boyish well into his 50s, Diamond had volunteered to cook hotdogs at a does appear confi dent, with a cheery, school event. The time the Diamonds upbeat manner—the demeanor of someone gave a school security offi cer two tickets

PHOTO COURTESY OF BARCLAYS who enjoys his job and his life. But to a Chelsea soccer game. The offi cer was Bob Diamond ’73 gestures during a accompanying the disarming grin is an amazed to fi nd himself in the Barclays box. presentation to Barclays employees on a intensity, a feeling that his mind is running “Bob will attend every performance of trading fl oor of Barclays Capital in London. at hyper speed. his children’s plays,” Mules said. “Not just In a half-hour conversation, Diamond once. He’ll be there every night.” of the coming years. And in many senses, talked about the increasingly global Sure enough, that night Diamond that’s epitomized by Bob.” banking world, with economies evolving arrived at the Cockpit Theatre, in and with capital, once directed to northwest London. The play: The hen he is not traveling, the epitome Wof the new iteration of the British developing nations by institutions like Madwoman of Chaillot. Nell and Charlie investment banker works out of a glass- the World Bank, now fl owing naturally. Diamond had prominent roles in a tale of walled offi ce on the second fl oor of the A Colby trustee, he talked about Colby’s German-occupied Paris. Jennifer Diamond 10-story Barclays Capital building on strategic plan, which he admires for its was backstage doing costumes. Canary Wharf in London’s booming clear priorities as articulated by President That day, February 27, a sell-off in fi nancial district. Through the windows, William D. “Bro” Adams. It is essential, he the Chinese stock market had triggered a Diamond can see the trading fl oor, with its said, that the Diamond Building at Colby, domino effect in the UK and U.S. markets, rows of cubicles, each staffed by a trader for which his family’s foundation gave the prompting a fl utter of the-sky-is-falling staring intently at a bank of computer naming gift, have a clear and signifi cant news reports. Standing in the theater’s screens. It is an increasingly global impact on teaching at the College. lobby, Diamond seemed unconcerned, workforce, and Barclays recruiters now Diamond talked about his educator even exhilarated, saying he doesn’t mind make stops in India, eastern Europe, Korea, father, who never stopped learning, and when there’s a bit of a shakeup. “I like the and Singapore, among other places. about the value of a liberal arts education. competition.” Inside the offi ce, the décor is startlingly The stack of books awaiting him on a side Then the lights blinked and the audience American. table included A Distant Mirror by Barbara fi led in, taking seats on benches in the small While there is English soccer memorabilia (Barclays sponsors the Premiere League, the Tuch ma n, Teacher Man by Frank McCourt, theater. The houselights were dimmed top echelon of English football), there also is Leadership by Rudy Giuliani, My Life In and the audience was quiet. Markets were a framed page of the Boston Globe, published and Out of the Rough, by golfer John Daly, forgotten for the moment as the stage spots the day after the Red Sox won the 2004 and Heroes All, by Ryder Cup golf legend came on, illuminating a Paris café. The World Series. A photo of Red Sox catcher Darren Clarke—among many others. actors came onstage, and the drama began. Jason Varitek hugging pitcher Keith Foulke He stepped out to take a phone call, Diamond was no longer the high-fl ying moments after the series was clinched. A cap and when he returned he was asked about international banker, but the dad. signed by Patriots quarterback Tom Brady. the rows of photos of baseball and soccer First came an elbow, as Diamond leaned Diamond still has a house on teams (“London Little League Champions, over and said, “That’s my girl.” Nantucket, where his father fi nished his Undefeated 2002”), smiling kids in colorful Then another elbow. “That’s my son,” career in education and the family spends uniforms, fl anked by Coach Diamond. he said. time every summer. The benefi t? “It gives “They’re all winners,” Diamond said. In the darkness, Bob Diamond was [the children] an anchor,” he said, adding “Only a few won championships.” beaming.

COLBY / FALL 2007 27