O’Neill takes the helm at Barclays

Author: By Andrew Garfield Financial Editor

Born: 31 October, 1946

1969: BA in European civilisation at Princeton University

1974: MBA at University of Virginia

1969-71: US Marine Corp

1974-85: Continental Bank, Assignments in Belgium, Hong Kong and London

1985-88: London-based independent consultant

1989: Rejoins Continental as head of mergers and acquisitions.

1993: Chief financial officer at Continental

1995: Chief financial officer at BankAmerica after it merges with Continental

1998: President, principal investing & wealth management at Bank of America after BankAmerica-NationsBank merger

BARCLAYS BANK yesterday appointed , a former chief financial officer of BankAmerica, as its new chief executive, plugging the gap left by Martin Taylor’s surprise decision to leave the job last November.

Mr O’Neill, 52, a half-Belgian, former US marine lieutenant who claims to have spent more time in London than anywhere else, is the first foreigner to have been appointed to what is one of British banking’s most prestigious posts.

Mr O’Neill will receive a salary including pensions and allowances worth pounds 2.3m in his first year plus performance-related share options worth pounds 3.4m at current prices. That compares with Mr Taylor’s package of pounds 738,000 last year.

As a gesture of commitment, he has also agreed to buy pounds 5m worth of Barclays shares out of his own pocket, which Barclays has agreed to match. The shares will be forfeited if he leaves the bank within three years. Mr O’Neill’s share options will also not be exercisable within that period. Barclays was clearly mindful of the experience of Cable & Wireless, which lured Dick Brown from the US to be chief executive, only to lose him 18 months later when he returned to the US to run computer group EDS.

The news that the bank had landed a senior American banker was well received in the City where Barclays share price soared 6 per cent to pounds 14.20 yesterday.

There had been fears that a long delay in finding a replacement for Mr Taylor could leave the bank rudderless at a time when urgent strategic decisions need to be made. But Mr O’Neill denied he had been brought in to steer Barclays towards a merger with another bank or to sell off or shut down Barclays Capital, the group’s troublesome bond broking business.

However, Mr O’Neill has played a key role in two of America’s biggest banking mergers – the first, in 1994, as chief financial officer of Continental Illinois, where he led the team that negotiated the merger with BankAmerica, and then last year when again as chief financial officer he was instrumental in forging the same bank’s merger with rival Nationsbank. He does not come over as a man happy to stand still.

“When you are as large as this company is, you need to look at mergers as one of the things you do to add value,” he said yesterday.

Analysts said that to move immediately on the merger front would clearly be rash, but in the longer term, the choice of an American, who learnt French at his mother’s knee and who has spent most of his working life abroad, raises interesting possibilities. He knows the American banking scene inside out, and his appointment will put Barclays on the map as far as the US industry is concerned.

“Barclays will not be thinking merger with its share price at pounds 14,” said Richard Coleman, banks analyst at Merrill Lynch. “However a more interesting line of thought is a UK and US deal – that is a natural way to go.”

Mr O’Neill has made a substantial personal fortune out of shares and share options, and is very focused on the share price. At Bank of America he insisted on rigid risk controls.

Sir Peter Middleton, who stood in as caretaker after Mr Taylor left Barclays, was visibly delighted with his catch, not least because for months the City gossip had been that Barclays’ search for a chief executive had drawn a blank.

Sir Peter emphasised the similarities between Barclays and Bank of America – a large, mainly retail bank with operations in Asia and Latin America – and said that he would fit in with Barclays’ culture.

“He has an excellent reputation for getting things done and in a way which will carry the bank with him,” he said.

He added, in a remark that betrays Sir Peter’s feelings about what was lacking in Martin Taylor: “I will get on with him, although that is not the most important thing.”

The big question though is why did Mr O’Neill want the job? There is no doubt that since the BankAmerica and Nationsbank deal he had been sidelined, emerging from the post-merger power struggle with the lesser role of head of private banking.

His former colleague, the chairman and chief executive David Coulter, also left the bank last year in what amounted to a coup by the Nationsbank camp, and there had been rumours that Mr O’Neill had been unhappy for some time.

Mr O’Neill had been on Barclays’ hit list since late last year even though he was not approached until Mr Taylor left in December. He was interviewed last month and signed on the dotted line after a Barclays board meeting on Wednesday.

Mr O’Neill plays down his dissatisfaction, insisting that when he was approached about the Barclays job, he felt that the opportunity to run one of the world’s premier banks is not one that comes around too often. “I did not need much selling to take the job,” he said.

Ray Soifer, an analyst with the American firm Brown Brothers Harriman who has known Mr O”Neill for 15 years, said that the fact that he was on the wrong side in the power struggle that followed the BankAmerica Nationsbank merger did not make him second rate.

Mr O’Neill, he says, is an experienced banker and Bank of America is America’s largest bank. He is also a wealthy man who did not need to work again.

“The Bank of America experience will stand him in good stead. Like Martin Taylor he is bright and he is dedicated to shareholder value. Unlike Taylor he has spent his career in banking.”

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