Salz Review - Wall Street Journal

29
Salz Review
An Independent Review of Barclays’ Business Practices
Big Bang and the 1990s
4.6 By the time of Big Bang, Barclays had 110,000 employees 31 and it sought to take
advantage of the deregulation in wholesale markets. In 1986 it bought the
stockbroker de Zoete & Bevan and stockjobber Wedd Durlacher to create Barclays
de Zoete Wedd (BZW).
4.7 In common with other banks, Barclays incurred significant losses during the UK
economic downturn of the early 1990s, setting aside more than £4 billion in retail
and commercial credit losses in 1991 and 1992. Interviewees told us that Barclays
learned major lessons from this period, resolving to build more robust credit risk
systems. Andrew Buxton, a descendant of one of the bank’s founders, became
Group Chief Executive in April 1992, and Group Chief Executive and Chairman
in 1993.
4.8 There followed a period of retrenchment until economic conditions improved from
the mid-1990s. During 1994, Martin Taylor became Barclays’ Group Chief
Executive, bringing non-banking experience from the textile industry and a
perspective which was described to us as that of an outsider. He was the first Group
Chief Executive with no connections with the founding families of the bank.
4.9 In 1995, Barclays was one of the first banks to set up an internet website, a precursor
to online banking. In that year, Barclays also created Barclays Global Investors (BGI)
when it merged its BZW Investment Management unit with fund manager Wells
Fargo Nikko Investment Advisors, purchased for approximately $440 million. BGI,
headquartered in San Francisco, was allowed to run as an autonomous, standalone
division of Barclays.
4.10 Bob Diamond joined Barclays from Credit Suisse First Boston in 1996. A year later,
after suffering continuing losses in BZW, the bank abandoned BZW’s equities and
M&A advisory businesses. The retained fixed income business was renamed Barclays
Capital, and Bob Diamond was appointed its Chief Executive. Barclays Capital got
off to an inauspicious start in 1998, incurring significant losses on Russian bonds and
on its exposure to Long-Term Capital Management. There followed an internal
debate on the bank’s footprint in investment banking, not the first or last time this
has been the subject of debate in Barclays.
4.11 Martin Taylor left in November 1998. After his intended successor withdrew for
health reasons, the Chairman Sir Peter Middleton took over as interim Group Chief
Executive. Matthew Barrett, an experienced banker having previously run a Canadian
bank, was appointed Group Chief Executive in October 1999.
2000 to 2007
4.12 By 2000, Barclays was the fourth largest UK bank – behind Lloyds, RBS and HSBC
– with 1,718 branches. In that year, the bank acquired the recently demutualised
31 Barclays, 1986 Annual Report, March 1987, p. 34.