Despite initial reports, the move to bolster a key U.K. stockbroker may not be a vehicle for the former Barclays CEO’s comeback.
Former Barclays CEO Bob Diamond’s private equity vehicle Atlas Merchant Capital has joined forces with QInvest, the Qatari investment bank, in a £15.5 million ($19.5 million) bid for Panmure Gordon & Co., one of Britain’s oldest stockbrokers. QInvest already had a 43.4 percent stake in Panmure Gordon.
Although many are hailing the acquisition as the former Barclays executive’s return to the City of London, he will not have any involvement in the running of Panmure or sit on the board. At Atlas Merchant Capital, Diamond is the founding partner, CEO and member of the investment committee.
According to Patric Johnson, who is expected to keep his position at the helm of Panmure, the idea “is not Barclays 2.0, it is not Bob Diamond coming back in and saying he is going to be chief executive.” Johnson said he hopes that going private will allow the company to offer better incentives to staff under a partnership structure.
Panmure had been a leading light of the City, having started life in 1876 and in the early glory days placed loans for the Chinese Imperial Government, raised cash for beer moguls on both sides of the Atlantic, and bankrolled construction of railways around the world.
The firm also thrived after deregulation, the Big Bang in the 1980’s, but has recently fallen on hard times in line with many other smaller stockbrokers. Tighter margins, onerous regulation from the European Union and ensuing market changes have taken their toll at that end of the market.
In fact, Panmure reported a £16.7 million ($20.9 million) statutory loss in 2015 although it expects to make a small profit this year thanks to a busier period for mergers and acquisitions and stock market listings. The firm will provide full financial statements for 2016 on April 4, 2017, officials say.
The broker also underwent a management shake-up last year, which saw former CEO Philip Wale depart a week after Chairman Ed Warner announced his resignation. Following what some market participants called a “strategic misalignment” between Wale and the rest of the board, Johnson, then deputy chief executive, took the reins and was in charge of engineering a turnaround that included shutting its Swiss office and making around 100 redundancies.
Diamond is also no stranger to controversy. He resigned in the wake of the Libor-rigging scandal in 2012 and was criticized via a report commissioned by Barclays for fostering a culture in parts of the bank that lead to the scandal. Before he was CEO for Barclays, Diamond served as the president of Barclays and chief executive of Corporate & Investment Banking and Wealth Management, encompassing BarCap, Barclays Corporate and Barclays Wealth, officials say.
At the time of Diamond’s departure, his immediate replacement Antony Jenkins, who served as a director and as group chief executive, said in a prepared statement that bank officials “have made serious mistakes in recent years and clearly failed to keep pace with our stakeholders’ expectations. We have an obligation to all of those stakeholders … and a unique opportunity to restore Barclays reputation by making it the ‘go to’ bank in all of our chosen markets. That journey will take time, we have much to do, and I look forward to getting started immediately.”
In 2015, Jenkins was replaced by industry veteran James E. Staley.
Upon leaving Barclays, Diamond set up Atlas Merchant Capital and floated Atlas Mara Ltd., which bought financial services businesses in Africa with operations in seven countries. The objective was to create a banking firm that spanned the continent, but this has not materialized and shares have plummeted around 80 percent to £162 million ($203.5 million) since its listing in December 2013. Moreover, its chief executive John Vitalo, who joined the company as its first CEO in 2014, stepped down earlier this year.
The current deal with Qatar, which is Diamond’s most high-profile to date, is ironically happening at the same time that Barclays is at the heart of a criminal investigation launched by the Serious Fraud Office. The regulator is looking at the emergency funding injected by Qatari investors during the height of the credit crisis in 2008. This funding enabled the U.K. bank to avoid a taxpayer bailout.
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