It’s getting ugly in executive-recruitment land. “HP sues to block Hurd’s move to Oracle”, reads one FT headline on Wednesday, while another proclaims: “Outrage over Diamond promotion“, while the BBC’s Robert Peston asks, “Has the casino swallowed Barclays?”
That’s just a tiny taste of the furore that the elevation of the two — er, rather controversial — chief executives has whipped up on both sides of the Atlantic.
Now we’re just waiting for someone to make more of a fuss about the surprise move by UK prime minister David Cameron to appoint HSBC chairman Stephen Green as UK trade minister. Although, in tapping Green, as the FT adds, Cameron’s coalition government has followed the examples of predecessors that appointed former business leaders Mervyn Davies and Digby Jones to the trade role.
All three appointments have raised eyebrows, according to media reports (the move by Green far less so than Hurd’s to co-president of Oracle and Diamond’s to chief executive of Barclays).
Ultimately, though, the three moves have a few interesting things in common. For one, while the media has gleefully seized on the shock and horror of it all, the 8 per cent leap in Oracle’s share price on Tuesday and the reactions of analysts and commentators – particularly to the Diamond and Hurd appointments, suggest broad approval.
On Green, TheSource notes:
In naming the chairman of HSBC to be its new trade minister, the coalition government has borrowed a move from its predecessor’s play book….The goal of building deeper trade links with developing economies does make sense, and Mr Green certainly has the background to suggest that he is as good a candidate as any to lead that drive. Just don’t expect any miracles.
Meanwhile, as the FT notes, Wall Street analysts predict that Hurd’s arrival will see Oracle push more aggressively into the computer hardware business against some of the industry’s biggest names – including HP. All good for the share price, perhaps.
More significant, coming from entities as diverse as the UK government, UK bank Barclays and US software giant Oracle, the moves show clear willingness to override conventional considerations of hierarchy and background (i.e, yes, Diamond lacks experience in retail banking and credit cards; and yes, Green has no experience in government; and yes, Hurd’s previous — er, personal escapades at HP — are not exactly befitting for the president of a multinational corporation).
So what?, is the message.
On Hurd, as TheSource noted on Tuesday, it may have been more politically astute of Barclays to “name someone less controversial to the job”, at a time when the UK government is considering further limitations on bank pay and more demand for business lending. But, it notes, “that wouldn’t have gone down well with either Diamond or the banks’ shareholders.”
Indeed, for all the “outrage” that the FT and other media detect in the City of London over Diamond’s promotion, the move was a “no brainer” in TheSource’s view:
Since Diamond was passed over in favor of outgoing CEO John Varley in 2004, every step has been taken to signal he would be next, including adding to his responsibilities last year. The board appointed an external recruiter who compiled a list of possible candidates, but Diamond was always going to look like the best person for the job with his record in generating profits and deep ties within the bank.
In any case, it concludes:
…It’s hard to see him having stuck around under another boss, and shareholders and analysts would likely have been dismayed to see him go. In that light, Barclays’ decision was a no-brainer, and fits with its aversion of kowtowing to government interests.
A final point, perhaps, is to consider what the Diamond and Green appointments say about the image of bankers. As the FT’s chief business commentator John Gapper reminds us in his blog, Diamond’s appointment means that investment bankers will now head four of the biggest European banks (alongside Josef Ackermann at Deutsche Bank, Oswald Grübel at UBS and Brady Dougan at Credit Suisse.) Gapper concludes:
Diamond, who built up Barclays Capital more or less from scratch, no doubt deserves his prize, but the hegemony of investment bankers is breathtaking.
For better or for worse, the move could also embolden bankers worldwide, still cowering from the bashing they received at the height of the financial crisis.
As Bloomberg notes, some observers are taking the rise of Diamond and Green as indicating a rehabilitation of sorts for what has become one of the most derided career paths in the last few years. The report quotes investment manager Alan Beaney of RC Brown saying:
“Bankers are not as hated as they were 12 months ago…Back then the politicians would not have allowed Green into government and they would have created a great stink over Diamond. It shows the changing situation.”
Next, perhaps, we’ll see the number one “bashed banker”, ex-Lehman chief Dick Fuld, become US Treasury secretary.
Related links:
Bashing Bob – FT Alphaville
Is Mark Hurd worth $6.8bn? – DealJournal
A Diamond Bank break-up? – FT Alphaville
Barclays’ success comes at a price – FT