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Martin Taylor was the chief executive of Barclays from 1994-1998. Working under him was Bob Diamond, the bank’s most recent chief executive, who was forced to resign amid an interest rate scandal.Taylor wrote an op-ed for the Financial Times detailing a huge trading loss that Barclays experienced in 1998, a trade that was from Diamond’s unit. The traders who were involved in the trade were fired, and Diamond had offered to resign from the bank. However, Taylor did not let him quit, for fear that Barclays Capital would “fall apart without him.”
It was a close call. I suspect the subsequent history of the business would have been very different had I asked him to go. I deserve blame for being among the first to succumb to the myth of Diamond’s indispensability, to which some in Barclays were still in thrall only a matter of days ago.
The trade was a five-fold increase in exposure to Russia’s bond market, a trade that almost every bank was hurt by, but Barclays was hurt significantly more due to Diamond wanting to essentially up the ante on the trade.
While this trade was certainly unlike the LIBOR rate-fixing scandal that caused Diamond to resign, it does show that he has a history of questionable decisions.