Diamond resigned on Tuesday, six days after news broke that the Financial Services Authority had fined the bank £290m over the interest rate fixing scandal.
Diamond and three colleagues offered to forgo their bonuses, but pressure continued to mount from investors, politicians and the media. The resignation of Barclays chairman Marcus Agius on Monday failed to take the heat off Diamond.
Corporate reputation experts said the bank’s PR strategy of putting ‘firewalls’ around Diamond had failed and that it now needed to strike a different tone.
College Hill managing partner Tim Fallon said: ‘That Bob Diamond has resigned is not surprising. What is surprising is that it took as long as it did and looked so badly handled… It’s as bad as it gets and is a game-changing moment for the reputation of the business.’
More than six hours after the news broke, Barclays released a letter from Diamond to Andrew Tyrie, chairman of the Treasury Committee. The bank also announced a wide-ranging audit of its practices.
But David Bick, chairman of Square 1 Consulting, criticised the preparedness of the comms response.
‘The FSA’s investigation relates to actions in 2008, so Barclays has had years to plan this response. Yet it took all day to publish Diamond’s brief letter. On top of this, the bank was briefing on Sunday that Marcus Agius was "categorically" not going to step down as chairman, only for him to do so on Monday, and reappear as full-time chairman on Tuesday.
‘Diamond’s is not the only head that should roll.’
Other industry observers noted, however, that Diamond’s often defiant stance to public and political pressures made it difficult for the comms team to strike the right tone. Last year Diamond told MPs that the 'time for banker remorse is over’ and he has previously been fiercely resistant to suggestions he should voluntarily cut his pay package.
One source noted that Diamond’s resignation statement did little to redeem the bank’s position as he blamed ‘external pressures’ for his resignation rather than showing contrition.
The bank may now be able take a more proactive comms stance now that its primary focus is no longer to defend the position of its CEO.
Fallon said: ‘Barclays needs to engage with its customers and broader audiences in a way it hasn’t for some time, creating a more direct relationship driven by values and personality.’
Andrew Robinson, board director of Euro RSCG London, said: ‘It’s a once-in-a-lifetime opportunity for banks to recalibrate their role in society.
‘Moving from negative to positive is going to require some big thinking and big actions.’
25.5 Hours between Agius quitting and the news that he was to continue*
£290m The record fine given to Barclays for attempting to manipulate the Libor
26% Rise in people opening a Nationwide current account during Libor crisis**
£1.4m Speculated amount of Bob Diamond’s severance package***
Sources: * Barclays; **Nationwide Building Society; ***The Daily Telegraph
How I see it
Stephen Abell, corporate and crisis comms head, Pagefield
The major failures here can all be blamed on bad internal communications. Were the right people at the right levels told of what was going on and were the discussions had to establish what the worst-case scenario would be? I think because of the size of the organization – Barclays was caught napping. Now there is blood in the water the press and politicians are going to be sniffing around for more and the reputation of the banking industry could spend a long time trying to recover.
Nick Murray-Leslie, CEO, Chatsworth Communications
The strategy of the chairman resigning, testing the temperature and then taking a view on the CEO was the right thing to do. Unless he has personally acted with impropriety, it should have been his responsibility as leader to apologise, repair and build a stronger bank which earns back trust. This was simply not possible against the backdrop of public and political anger around the LIBOR issue. The reputational fallout totally eclipses any achievements in the public mindset.
New corporate chief arrives early to tackle crisis
The reputational crisis follows a fundamental recalibration of Barclays’ comms team.
The bank recently appointed a new corporate comms chief, Stephen Doherty. He was due to start his role on Monday, but it is understood that the former Diageo comms chief began last week, to help with the issue.
One source notes that a key reason Doherty has been handed the newly created position is that his experience outside the banking sector would help him understand how reputational issues will resonate outside the City.
Doherty works alongside the bank’s vice-chairman corporate affairs, Howell James, who is thought to have taken an active role in the affair as it became more political.
Director of media relations Giles Croot is handling day-to-day media relations, reporting to Doherty.
Portland has joined financial PR agency Brunswick and retained UK public affairs agency Cicero Consulting in helping Barclays shape its comms response.
Only last month, Nichola Sharpe joined from Lastminute.com as head of consumer media in retail and business banking. Three’s Chris Semple and comms freelancer Phillippa-Jane Vermoter were appointed associate directors in the media relations team.