One on One with Robert Diamond, President of Barclays PLC
Monday, April 23, 2007
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SUSIE GHARIB: A short while ago, I talked with Robert Diamond, the president of Barclays in London. My first question, why is Barclay's paying $91 billion for ABN Amro?
ROBERT DIAMOND, PRESIDENT, BARCLAYS PLC: It's an acceleration of our strategy and if you look at the portfolio of businesses in a combined group where Barclays has a very strong UK, the Iberian Peninsula, Spain and Portugal, South Africa, sub-Saharan Africa. And with the integration of ABN's businesses now, Holland, Benelux, the Nordic countries, very strong retail position in India, in Russia, in Pakistan, Antonveneta in Italy. One of the strongest middle market corporate businesses across Europe or any of the big institutions over here and of course the terrific operation in Brazil. So what we're seeing is the geographic spread is very - it really compliments each other. There is not much overlap.
GHARIB: Bob, that is a sprawling empire that you're describing. Does Barclays have the manpower, the expertise to execute this merger?
DIAMOND: Keep in mind this is a merger. So we're going to have talent from both sides of the business working on this. They're running these businesses now on both sides and we think that the synergies that will from the merger, from the two organizations operating as one, very, very powerful.
GHARIB: You talk about synergies. You also talked today about the cost savings and thousands of jobs that will be cut in the process. Is there a risk that all of these cost savings will damage revenue growth?
DIAMOND: No, we don't see that at all. In fact we see positive revenue synergies in addition to positive cross synergies and when you look at combining retail and commercial banks of both sides, is I said, the businesses compliment each other very very well. It's not much overlap. So the cost cuts and the head court reductions aren't because we're doing the same thing in the same location. It's really about becoming more efficient and driving one technology platform and one operations platform and the revenue synergies are from more and more of the Barclay's capital risk management products being sold in India, in Italy through Antonveneta, in Brazil, for example.
GHARIB: Bob, there has been a lot of speculation today that Barclays rival, Royal Bank of Scotland and its consortium investors will make a counter bid. If it does develop into a bidding war, how far are you willing to go to get ABN Amro?
DIAMOND: Listen, this is a terrific deal. It's also a merger. It's agreed. It's a unanimous recommendation to the shareholders from both boards. There's a lot of dramas and rumor about other bids out there. But it's just drama and rumor at this point. This integration is about a business that we see with great growth prospects going forward. We think this is the deal and the best deal.
GHARIB: Many of the analysts I talked to today felt that that $91 billion price that you're paying is pushing the limits for Barclay's and they're not sure that if there is a bidding war, that you can afford to go much higher. What are your thoughts on that?
DIAMOND: We said from the beginning that in order to execute on this transaction, we had to be very, very clear about the management, real clarity around who is in charge and who's running what businesses. We have that. We also had to be very, very clear and were clear with our shareholders that we weren't going to over pay. We think the economics of this for both sets of shareholders and most importantly for the ongoing new set of shareholders or combined set of shareholders, I should say, is very very strong. Clearly the economics are even better with the Bank of America purchase of La Salle which was announced at the same time this morning.
GHARIB: Did you want to keep LaSalle?
DIAMOND: We had very, very good discussions about this. LaSalle is an outstanding bank. It's not the right fit for Barclay's or for the combined entities. It's more retail and commercial banking in a small area of the U.S. as opposed to the kind of things we like to do in the U.S. to enhance Barclays capital and Barclays global investors. So great bank, probably the wrong fit and something we had been talking about through this deal, yes.
GHARIB: As you know, shares of both Barclays and ABN Amro were down today. It seems like some of the investors have some doubts about the deal. What else do you think that you have to do to convince them otherwise?
DIAMOND: We're going to spend time with shareholders over the next couple days to explain why we're so excited about the deal. I think it's important to sit down and go through how we're going to achieve the cost synergies, how we're going to achieve the revenue synergies. To us the most important part of this deal is it positions us very well with customers and clients. It's a bigger foot print. We have very, very strong products on both sides from ABN and from Barclays. And the thing that really excites us is that we see tremendous growth opportunities going forward in some of the world's good growth markets like Asia and like Brazil.
GHARIB: All right. OK. We hope to follow-up with you as this deal develops. Thank you so much for joining us this evening.
DIAMOND: You're welcome. Thanks Susie.
KANGAS: In Washington today, a presidential task force wrapped up its work on identity theft. The task force was set up almost a year ago after the personal data of nearly 27 million veterans was stolen in a laptop computer theft. As Stephanie Dhue reports, from small steps to new legislation, the panel favors a comprehensive approach to fighting identity theft.
STEPHANIE DHUE, NIGHTLY BUSINESS REPORT CORRESPONDENT: Identity theft can turn people's lives upside down in a matter of minutes, be it from a stolen wallet or a hacked database. All an identity thief needs to open up lines of credit is a name, address and Social Security number. Task force co-chair and Federal Trade Commission Chairman Deborah Platt Majoras says that's why her agency has become the Federal clearinghouse for more than 1,500 law enforcement agencies.
DEBORAH PLATT MAJORAS, CHAIRMAN, FEDERAL TRADE COMMISSION: Only a coordinated approach will have the reach and impact necessary to effectively attack this crime.
DHUE: The task force recommendations include reducing the use of Social Security numbers by Federal agencies, national standards to safeguard personal data, a standard notice to consumers when a data breach occurs and the creation of a national identity theft law enforcement center. But consumer groups say the panel's recommendations fall short. Ed Mierzwinski of the U.S. Public Interest Research Group says the task force failed to address the real problems.
ED MIERZWINSKI, DIR., US PUBLIC INTEREST RESEARCH GROUP: The attorney general and the Federal Trade Commission are afraid to go after the root causes of identity theft, which are sloppy use of personal information and sloppy credit granting decisions. Both the government and the private sector treat our financial DNA cavalierly. Neither one wants to take responsibility.
DHUE: Consumer groups wanted the task force to support a credit freeze, which prevents anyone from opening a line of credit in your name. Already 25 states have some type of freeze, but the Federal Trade Commission's assistant director Betsy Broder says she's not sure that approach will work.
BETSY BROADER, ASSISTANT DIRECTOR, PRIVACY AND IDENTITY PROTECTION: There are variations to how the states apply them. In some cases you can only get access to this if you're a victim of identity theft. In other states anybody can do this. There are some states where it's free, other states where you charge. So we thought before going rushing into this, we would evaluate how well they are working.
DHUE: Lawmakers might not be as patient. Already there are several bills on Capitol Hill that would set standards to protect personal information and give consumers the right to freeze their credit. Stephanie Dhue, NIGHTLY BUSINESS REPORT, Washington.
