Barclays keeps apologizing for saving the bank
Strong leaders must choose the right path
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| "It took Barclays 300 years to get to 30 million customers. We’ll be at 60 million within four years" Frits Seegers, Barclays |
Between Bob Diamond driving the build-up of Barclays Capital on the one side and Frits Seegers driving the build-up of global retail and commercial banking on the other, John Varley must occupy one of the most interesting seats in global banking, if not always the most comfortable one.Entering his 14th year at the bank, Diamond is the long-serving head of a new entity, very much his own creation and that of a few trusted colleagues. Meanwhile if Seegers is heir to Barclays’ 300-year tradition as a retail and business bank, he shows no great respect for history but rather plenty of Diamond’s drive and ambition, if a little less of his easy bonhomie.
Seegers is Dutch and an engineer by training. He ran the Asian banking operations of Citi before taking the new position of head of global retail and commercial banking at Barclays in 2006. It has been all go ever since he arrived and he’s not about to slow down.
Drawing a line under the bank’s history before his own arrival, Seegers says: "It took Barclays 300 years to get to 30 million customers." In the three years since he came on board, it has grown that to 50 million. "We’ll be at 60 million within four years."
While Barclays Capital has been doing its thing, Seegers’ troops have been acquiring small banks and credit card operations and opening hundreds and hundreds of branches, 900 last year alone, mainly outside the UK. He reckons the bank acquired 9 million customers last year and, with an engineer’s precision, calculates that at three customers a second.
And this is very much the Seegers’ show.
UK retail banks have long been a shop of horrors renowned the world over for their awful customer service, derived from dilapidated technology and hopeless systems that cannot even share information between the credit card divisions and regular bank accounts when it comes to assessing a personal loan application.
Seegers says: "Look, I hear you. This industry has conditioned customers over time not even to ask for the best service. But I’m trying to separate us from the pack." He pulls out a laminate with a series of charts of service level indicators for business customers. He says: "We’ve made good progress driving up our service quality. We’re asking if we can bring private banking service quality to premier accounts and the mass market. And while we’re being tight with costs, we’ve continued to lend money and we are in a position to use this opportunity to expand our market share."
Seegers has installed new management information systems. A huge screen fills one wall of his large office at Churchill Place in London’s Docklands. He starts calling up pages for each of the UK branches. It shows new accounts opened that day against a daily target, new savings brought in that day down to the last £1,000, against the daily target, new loans made. Beside each set of key metrics is a picture of the branch manager and his or her phone number.
Scarborough, Sheffield, Wallasey: the unclosing eye of Seegers passes over each, searching restlessly. Suddenly he is off to Africa, drilling into the bank’s branches in Kenya and further down into individual customer accounts. What exactly has Barclays done today for the Kenya Sugar Board?
Euromoney shrugs off the unfortunate thought that this is like sitting opposite Dr Evil in his "secret lair" and asks instead if pressing managers on daily targets for new accounts, savings and loans is the right approach. Seegers is sure that it is. "This is the only way to manage this kind of business. If you’re not on top of your numbers for the day, you sure won’t be for the week or the month. The key is how you use this information. You have to give it back to people to help them do their jobs better."
Numbers bring him satisfaction. "We have been affected by the crisis of course but our base business has never been better. We delivered £4.4 billion ($7 billion) of profit last year out of a group total of £6.1 billion and that puts us in the top handful of retail and commercial banks in the world. We made £3 billion in the UK last year." For comparison, Lloyds Banking Group made £1.8 billion profit from the UK.
In the short run, Seegers is cautious. He talks to businessmen each day who tell him how difficult it is to measure demand for their goods and services and how orders can evaporate overnight. Businesses are cautious about drawing loans. They are more interested in the banks’ services for insuring themselves against certain risks – for example, commodity prices and, for UK importers, currency risks.
In difficult markets, Seegers says his inclination is to be cautious and – if this doesn’t sound too soft for a Dutch engineer – to position Barclays not in an adversarial way against its customers but as a bank that can help. Here its continued commitment to international banking, at a time when foreign banks are pulling back from the UK and British banks are reducing their commitments abroad, might well be a hugely significant differentiator.
"We can really help businesses to find customers abroad, to use our networks to put businesses in touch with each other," Seegers says. "We recently hosted business trips to India for 10 of our Italian business customers and 10 Portuguese. Eight of the Italians came back with firm business mandates and six of the Portuguese. For any company facing tough times, wins like these can be a very big thing."
Barclays opened its retail banking operations in India two years ago and now has more than 900,000 customers. It has a licence to operate in Pakistan and has opened its first 20 distribution points. It sees big opportunities in Africa, where it has almost 50,000 employees in 1,800 branches and hopes to intermediate commodity flows between the continent and China worth many tens of billions of dollars a year. It opened 347 branches in continental Europe last year and now has more than 1,150 branches, with almost 600 in Spain, more than 230 in Italy, 200 in Portugal and 120 in France. It also entered Russia through the acquisition of Expobank.
Is this any more than a mere ragbag of international bits and pieces with some interesting earnings potential? Or could it be the base for a powerful, global force in international banking? There’s not much point in asking Seegers that question. "We had a 20% network expansion last year from under 4,100 branches to over 4,900," he says. "We opened more branches last year than some sizeable banks have in total. And Barclays has options. We can build organically, and we have accelerated that. And if the right strategic opportunities arise, Barclays has shown the discipline to consider them."
Will Barclays stand out, perhaps with Santander, JPMorgan and HSBC, as one of banking’s very top tier in the years ahead?
"Bob has diversified into the US," says Seegers, "and we have expanded in Europe and Asia. And yes, I think that in a couple of years people will look back on this time and say that was when it began to come together for Barclays, that was the beginning of the Barclays era."
