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Barclay’s CEO, Bob Diamond, resigns with immediate effect” the Sky News tickertape announced just before 7.30am a week ago today, 3rd July. I was at the gym and the whole place stopped to read the story before gradually nodding with the appearance of a David having finally defeated Goliath.  Over the following few hours, news of the Barclay CEO’s sudden departure caused greater hysteria than would have been seen had England actually made it past the EURO 2012 quarter finals a week earlier.

Politicians immediately Teflon coated themselves; the media went into overdrive with yet another banker’s scalp to display; and every anti-capitalist/anti-banking/anti-employment/anti-bathing protester cheered so loudly they almost dropped their fat-free, caffeine-free, dairy-free, sugar-free, taste-free, offense-free Soya latte on their sandals.

But what now?

Some people will try and pretend that LIBOR hasn’t been ‘played with’ for years and that it wasn’t common knowledge across ‘The City’, the Bank of England and the Treasury – indeed the perfected ‘surprise faces’ must have taken longer to perfect than the well rehearsed statements condemning the practice.

Bankers lied. About that there is no doubt. But people ‘flex’ values and truth all the time. Selling your house, you do what you can to ride the market? Even cheating is sometimes, seemingly fine. Were England’s football team vilified for failing to immediately fess-up that the Ukraine goal actually wasn’t?

For Barclays, the UKs second biggest bank (behind HSBC), they are suddenly left without a leader, made even worse by the intention to resign from Chairman Marcus Agius in the same week. But as, every Teflon politician, every revolting shareholder, every band-wagon jumping tabloid paper and every socialist will tell us; CEOs are overpaid and easily replaced. They are nothing special and frankly do not earn, nor deserve their comical pay awards.

Meanwhile, Barclays, along with other major corporations defending their CEOs’ awards are insisting the awards are just, not only in recompense for effort and success, but also as their leaders are irreplaceable.

So who’s right?

Barclays had spent over decade preparing Bob Diamond, the world’s best banker, to ascend to the throne. Ergo: he became more powerful, and ever harder to replace. He had also steered the only true major UK bank not to need a government hand-out through the worst financial services crisis, and the worst macro-economic environment in living memory. He was the King of the Brit Bankers, and the best paid. Hence he was public enemy number one….hence Barclays will struggle to replace him, or to find someone up for such ascension.

The obvious internal candidate, COO Jerry del Missier, is out of the running – he resigned before Diamond did over the LIBOR fiasco. Two other leading contenders, Rich Ricci, head of the investment bank, and Tom Kalaris, wealth management CEO are deemed too close to Bob Diamond (although knowing Tom Kalaris, I believe he would make a fantastic Group CEO).

Let’s take this outside…..

So the search will head externally.  We have recently been involved in two, FTSE-100, C-Level Financial Services searches. In the FTSE-100, there are 5 Banks, 5 ‘Financial Services’ groups, 6 Life Insurance businesses and 2 non-life insurance (18% of the FTSE-100 tells us how important the broader FS sector is to the UK). That gives traditional search firms and traditional methodologies just 17 businesses to hunt from.

I have spoken to lead contenders from around half of those businesses, and let’s just say, appetite to move in the current climate is not overflowing – let alone to move to the hottest of political hotbeds that comes with greater media scrutiny than a premiership footballer on a seemingly indefensible race charge.

Common sense would suggest one of the 8 insurance businesses as a target, as their sector has been largely unaffected (or rather un-maligned) by the ‘banking crisis’ and thus leaders from that sector are seen as cleaner and more shareholder/regulator appeasing. Persuading insurers to become bankers is not an easy task though!

Diamond’s successor will have to be a “detail person”, and to appease public, authorities and media alike will have to at least speak of the desire to reverse Diamond’s expansionist zeal in investment banking. They will also have to have the ability to appease and make peace with the authorities, something Diamond was seemingly spectacularly bad at.

The traditional old school search firms will explore their well trodden networks, come up with the same names, take 3-6 months to do so, then marvel at the lack of interest before blaming their client for an impossible brief, further complicated through recent events whilst still pocketing at least 66% of their banker’s bonus size fee.

……Meanwhile we could have expedited the search to just 2-3 weeks, whilst thinking laterally – and guaranteed success with a 100% refund; such is the extent to which we back ourselves to deliver.

Diamond geezer or flawed gem?

Is Diamond the toughest substance known to man?

Bob Diamond has been accused of being the epitome of the rot in The City, the embodiment of greed. He was billed as being wholly unsuitable to run a major organisation, let alone a major global bank. But was he? Barclays spent 15 years grooming him to take over – they must have seen something?

He remained hugely popular in key circles. “He engendered great staff loyalty right through the ranks” says one former colleague. Even at this year’s annual meeting of shareholders, most investors lauded the chief executive, even as they excoriated the board for granting him such a generous pay deal, but a few vigilantes aside, no-one really disagreed with his value.

Diamond was undoubtedly an entrepreneurial banker. He took over Barclays Capital in 1997. At the time, the investment banking unit had £135bn in assets and made £250million pre-tax profit. By last year, assets were five times higher at £1.2tr and profit was twelve times greater at £3bn.

Credit boom aside, much of that gain was due to Diamond’s ability to persuade the main board to pour resources into investment banking. His entrepreneurial flair continued after the credit crunch when the bank acquired the largest chunk of Lehman Brothers out of bankruptcy.

Diamond’s pay reward has been the subject of immense scrutiny, vilification and downright hatred. It is estimated, and well reported, that Diamond has earned £120m over the past 8 years since he joined the board (and less well-reported that he has given around 25% of that away to charity). Massive sums, but in the context of lifting annual profits to £3bn in BarCap alone, (contributing 79% of Barclay’s group Profits), not as excessive as the Daily Mail and members on both sides of the house would perhaps have you believe.

“You’re irreplaceable”….?

The replacement will be a mountainous journey, led by Marcus Agius before he leaves

Agius. On his bike…..

the stage. He is tasked with undertaking the search as his swansong, whilst also leading the executive team in lieu of a CEO – this despite accusations that he is as unsuitable to perform either function as he was as acting as Chairman to control Bob Diamond, again an unfair levy in my opinion.

Most Chairmen plan the replacements of their CEOs like military maneuvers. We deal with many Chairmen who start the informal discussions about when/how/who well before it is needed, this to ensure a seemly transition. This long-term succession planning also keeps us very well abreast of the key contenders at any one time, hence our ability to truncate an industry average 24 weeks turnaround to 6 – and guarantee it.

All of a sudden, Marcus Agius has the immense challenge of replacing Bob Diamond, years ahead of when planned (Diamond was only 18 months into the job) and in double quick time. Such a task is unenviable as it is, but with the appointment being absolutely crucial in helping to fix regulators’ concerns about the whole “culture” of the UK bank, as well as his sudden responsibility for the day-to-day running of a Bank on its knees, his task will be a far bigger cause of insomnia than his appearance before the Treasury Select Committee today.

Succession planning is vital. Diamond’s succession plan had been in excess of 8 years and arguably 15. Due to the scandal braking within Barclays as opposed to one of the other doubtless proponents, the current internal succession planning has been thrown into disarray with the departure of one and deemed ‘too close’-ness of two others.

Mr Agius needs to do something not only quickly, but do something different. The standard, old fashioned list of old-guard executive search firms such Groups use is as unimaginative as the longlist of CEO contenders they in turn come up with.

Even the regulator has implied, strongly, that a whole new approach is needed, not only in the Group’s management and leadership style, but in how that management is sourced, selected and appointed. The shareholders crave similar, a fresh approach, and shareholder value. Will Marcus Agius listen?

Mr Agius, you can reach me here.