WHEN: TODAY, WEDNESDAY, SEPTEMBER 17TH AT 3:15PM ET
WHERE: CNBC'S "CLOSING BELL"
Following is the unofficial transcript of a CNBC EXCLUSIVE interview with Barclays PLC President Robert Diamond today on CNBC's "Closing Bell."
All references must be sourced to CNBC.
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BARTIROMO: MEANWHILE, BARCLAYS, ANOTHER DEAL TO TELL YOU ABOUT, AGREEING TO ACQUIRE LEHMAN'S INVESTMENT BANKING AND CAPITAL INVESTMENT MARKETS IN NORTH AMERICA, THE PRICE TAG IS $1.75 BILLION. THAT INCLUDES MUCH OF THE CASH -- IN FACT, IT INCLUDES FOR LEHMAN'S NEW YORK HEAD OFFICE NEAR TIMES SQUARE. THE EXCLUSIVE HEADQUARTERS BUILDING. JOINING ME TO TALK ABOUT THE DEAL AND WHAT IT MEANS FOR WALL STREET, ONE OF THE SURVIVORS IN THIS FINANCIAL CRISIS FOR SURE, BOB DIAMOND PRESIDENT OF BARCLAYS PLC HEAD OF ITS INVESTMENT BANKING MANAGEMENT BUSINESS. BOB, WE SO APPRECIATE YOU TAKING THE TIME DURING WHAT I KNOW IS A BUSY DAY FOR YOU.
DIAMOND: THANK YOU. GOOD TO BE HERE, MARIA.
BARTIROMO: THANK YOU. LET'S TALK ABOUT THE DEAL.I GUESS YOU WERE ABLE TO ACQUIRE ASSETS AT AN ATTRACTIVE PRICE, FROM YOUR STANDPOINT.WHAT BENEFITS DOES BARCLAY GET OUT OF THIS BUSINESS?
DIAMOND: YOU'RE RIGHT. IT WAS BOTH A VERY GOOD DEAL STRATEGICALLY AND FINANCIALLY. STRATEGICALLY IT'S JUST FANTASTIC. LEHMAN BROTHERS HAS REAL SCALE, DEPTH, TRADITION, CLIENT TRACTION HERE IN THE U.S. NOT AS MUCH IN EUROPE AND ASIA. BARCLAY'S CAPITAL IS A HUGE DEPTH IN SCALE IN EUROPE, IN AFRICA, AND THE MIDDLE EAST AND RUSSIA, INDIA, AND CHINA. VERY COMPLEMENTARY.IF YOU LOOK AT THE PRODUCT SETS, LEHMAN HAS EXCELLENCE IN M&A, EXCELLENCE ACROSS THE EQUITIES BUSINESS CASH EQUITIES AND IPOs, TWO BUSINESSES THAT BAR CAP HAS NOT BEEN IN. VERY, VERY STRONG IN THE CREDIT BUSINESS. ON THE OTHER HAND, BAR CAP NOW HAS FOUR BUSINESSES RANKED IN THE TOP THREE IN THE WORLD.THE FOREIGN EXCHANGE BUSINESS, THE COMMODITY BUSINESS WHICH HAS BEEN SO IMPORTANT, INVESTMENT GRADE DEBT AND INTEREST RATE TRADING. SO THE TWO COMBINED ARE NOW IN TOP TIER IN PRIME SERVICES AND LEVERAGE FINANCES AS WELL. SO WE LOOK ACROSS THE PRODUCT SET AND WE'RE IN THE TOP TIER IN EVERY ONE. WE LOOK GEOGRAPHICALLY DEPTH IN THE U.S., DEPTH OVERSEAS IN THE BIG ECONOMIES AND THE GROWING ECONOMIES, WE JUST FEEL TERRIFIC THAT BOTH BARCLAYS CAPITAL AND LEHMAN ARE PART OF A STRONGER ORGANIZATION TODAY THAN THEY WERE YESTERDAY.SO WE FEEL VERY GOOD ABOUT IT.
BARTIROMO: WHAT ABOUT THE INTERNATIONAL DIVISIONS, THEN?WHAT ARE YOU DOING ABOUT EUROPE AND ASIA?
DIAMOND: WE HAVE OPTIONS FOR THE PEOPLE FROM LEHMAN BUT NOT OBLIGATIONS AS THE WAY WE ARE PURSING IT.THERE ARE VERY GOOD OPPORTUNITIES THERE AS WELL.IN THE EQUITIES BUSINESS AS WELL, LEHMAN BROTHERS HAS A FANTASTIC CORE EQUITY FRANCHISE,RESEARCH, AND SALES AND TRADING AND IPOs. AND JERRY DINEENI IS VERY INTERESTED IN MANY OF THE PEOPLE THAT WERE OPERATING IN ASIA AND EUROPE AND PURSING THOSE OPPORTUNITIES TODAY.SO THERE ARE MANY AREAS, EQUITIES PROBABLY BEING THE BEST EXAMPLE BUT M AND A ADVISORY BEING A GREAT ONE WHERE IT'S A GREAT OPPORTUNITY FOR US TO HIRE MANY OF THE LEHMAN PEOPLE OVERSEAS.
BARTIROMO: LET ME ASK YOU THIS, BOB.YOU WERE ABLE TO CERTAINLY SUCCESSFULLY AND SOME SENSE CHERRY PICK THE BEST ASSETS BUT SOME PEOPLE MAY SAY, YOU HAD A SHOT TO ACQUIRE ALL OF LEHMAN BROTHERS AND SAVE THIS FIRM.WHY DID YOU WALK AWAY?
DIAMOND: WE GAVE IT A GOOD SHOT.WE DID DUE DILIGENCE AND WORKED CLOSELY WITH LEHMAN. WE HAD MANY MEETINGS WITH BOTH THE FED AND THE TREASURY. THE BARCLAYS BOARD AND JOHN FARLY WERE ABSOLUTELY TREMENDOUS.WE MUST HAVE HAD 14 BOARD MEETINGS OVER THE THREE OR FOUR DAYS.WE JUST COULDN'T GET THERE IN TERMS OF RISK AND IT WAS SOME OF THE ASSETS THAT WOULDN'T FIT ON OUR BALANCE SHEET. A GOOD EXAMPLE WOULD BE THE ILL LIQUID PRIVATE EQUITY THAT WOULD HAVE ATTRACTED MORE REGULATORY CAPITAL THAT WE COULD HAVE TAKEN AND ALSO DIFFICULTIES IN ARRANGING A GUARANTEE FOR OPERATIONS IN THE INTERIM BETWEEN THE ANNOUNCEMENT AND SHAREHOLDER VOTE.WE GAVE IT A GOOD TRY. WE WEREN'T ABLE TO GET THERE. BUT THAT INFORMATION WE GAINED IN DUE DILIGENCE WAS NOT JUST ABOUT THE POSITION BUT WE ALSO LEARNED IN DUE DILIGENCE THAT OLD LEHMAN WAS OPERATING FANTASTICALLY.THE EQUITY BUSINESSES, THE M ANDA BUSINESSES. THEY REALLY HAD STRONG PERFORMANCE. SO WHEN THE OPPORTUNITY EMERGED ON MONDAY TO TAKE PARTS OF THE BUSINESS OUT OF BANKRUPTCY, WE JUMPED AT THE CHANCE.
BARTIROMO: WELL, YOU'VE GOT 25 YEARS EXPERIENCE HERE.YOU'VE GOT A RESUME.BEFORE BARCLAYS YOU WERE A MORGAN STANLEY GUY.HOW COME YOU'RE NOT ACQUIRING MORGAN STANLEY?
DIAMOND: YOU KNOW, WE HAD AN OPPORTUNITY TO LOOK AT LEHMAN BROTHERS. THAT'S ALL WE'RE LOOKING AT THIS WEEK.
BARTIROMO: WOULD YOU LIKE TO ACQUIRE MORGAN STANLEY?
DIAMOND: NO, I WANT TO ACQUIRE LEHMAN BROTHERS.
BARTIROMO: LET'S TALK ABOUT THE GOVERNMENT BAILOUT AND WHAT IS GOING ON.SOME MIGHT SAY, HOW COME THE GOVERNMENT IS THERE FOR AIG AND FANNIE AND FREDDIE AND NOT FOR LEHMAN BROTHERS? HOW COME THE WAY WE ARE DOING IT IS SORT OF PIECEMEAL? WHAT IS YOUR CHARACTERIZATIONS ON THE WAY THE GOVERNMENT IS HANDLING THIS AND HOW COME NOT AIG AND LEHMAN BROTHERS?
DIAMOND: IN 25 YEARS IN THE BUSINESS, I'VE NEVER BEEN THROUGH A YEAR LIKE THIS.THERE IS NO PLAYBOOK. NOT FOR THE INVESTMENT BANKS AND CERTAINLY NOT FOR THE FED OR TREASURY.I HAVE NOTHING BUT ADMIRATION FOR THE WORK THAT WE DID OVER THE LAST FOUR TO FIVE DAYS WITH SECRETARY PAULSON AND HIS STAFF, WITH PRESIDENT TIM GEITHNER AND HIS STAFF.THEY WERE VERY ENGAGED AND FOCUSED AND TOLD US RIGHT FROM THE BEGINNING THAT THIS WASN'T A SITUATION WHERE THEY FELT IT WAS APPROPRIATE FOR GOVERNMENT FUNDS.SO WE KNEW THAT. WE TOOK A SHOT AT IT. AND WE FELT WE WOULDN'T KNOW FOR SURE BEFORE WE WENT THROUGH THE DUE DILIGENCE AND WE DID. THERE WAS NO PLAY BOOK FOR EITHER OF US.THEY HAVE TO TAKE ONE SITUATION AT A TIME AND THEY ARE GETTING THROUGH DIFFICULT CHALLENGES. BUT WE WILL GET THROUGH THESE. THE ENORMOUS INFLUENCE THAT THE FINANCIAL SYSTEM HAS HAD ON THE GLOBAL ECONOMY AND THE DEVELOPMENT IN SO MANY PARTS OF THE WORLD, IT'S IMPORTANT THAT WE GET THE FINANCIAL SYSTEM, YOU KNOW, THROUGH THESE CHALLENGES AND STRONG AGAIN.
BARTIROMO: IT IS AMAZING WHAT IS HAPPENING SO QUICKLY, BOB. WHERE WOULD YOU SAY WE ARE IN THIS CYCLE?YOU KNOW, EVERY DAY THERE SEEMS TO BE ANOTHER MAJOR BLOWUP. IS THERE A LOT MORE TO COME? WHAT IS YOUR VIEW?
DIAMOND: WE'VE GONE THROUGH A COUPLE STAGES.WITH THE CRISIS LAST SUMMER, IT WAS AROUND LIQUIDITY AND PLUMBING.YOU AND I TALKED ABOUT THIS IN FEBRUARY. THE EVENTS THAT HAPPENED, THE THOUGHTFUL INTERVENTIONS OF THE FED AND ECB AND THE BANK OF ENGLAND OVER EASTER WEEKEND PUT A LOT OF THE LIQUIDITY ISSUES BEHIND US.THE MONEY MARKETS STARTED OPERATED AGAIN. WE HAD THE MONOLINE SITUATION, FANNIE AND FREDDIE AND THE RATING AGENCY BUSINESS MODEL ISSUE AND WE RESOLVED MANY OF THOSE AND IN PARTICULAR, FANNIE AND FREDDIE AND MANY OF THE ISSUES AROUND MONOLINES.WE'RE GOING TO CONTINUE TO SEE CHALLENGES AS THE GLOBAL ECONOMY WEAKENS AND WE'RE GOING TO CONTINUE TO SEE CHALLENGES AS WE HAVE STRATEGIC IMBALANCES BETWEEN SUPPLY AND DEMAND. OIL IS OFF ON THE POSTER CHILD BUT IT'S REALLY ACROSS THE PIECE AND THOSE ARE GOING TO TAKE YEARS TO WORK OUT, NOT MONTHS.SO I THINK FOR THE BALANCE OF THIS YEAR AND INTO 2009, WE'RE GOING TO CONTINUE TO SEE CHALLENGES IN THE FINANCIAL SYSTEM BUT WE'RE SOLVING A LOT OF THE PROBLEMS AS WE GO ALONG.SO I FEEL GOOD THAT WE CAN CONTINUE TO MOVE FORWARD AND KNOCK A FEW OFF AND KEEP MOVING FORWARD.
BARTIROMO: CERTAINLY THE FINANCIAL STRUCTURE CHANGING IS ONE OF THE ANSWERS TO GETTING THROUGH THIS. DO YOU THINK THAT IT WILL BE CRITICAL FOR MOST INVESTMENT BANKS AND FIRMS OUT THERE TO HAVE THE DEEP POCKETS OF A DEPOSIT BANK INSTITUTION BACKING IT IN ORDER TO SURVIVE IN THIS VERY, VERY TOUGH PERIOD?
DIAMOND: YOU KNOW I'M VERY BIASED HERE. SO I HAVE TO THROW THAT OUT. WHEN I JOINED BARCLAYS 11 YEARS AGO AND WE CREATED BARCLAYS CAPITAL THE UNDERPINNING THE STRATEGY WAS THE GAME-CHANGING NATURE OF THE SINGLE CURRENCY AND EUROPEAN CAPITAL MARKETS AND THE SECOND WAS IN A WORLD WHERE NO LONGER IMPORTANT WITH A DEMISE OF EAGLE.THE UNIVERSING BACKING MODEL WE FELT WAS BEST FOR SERVING OUR CLIENTS AND SO MANY LOCATIONS AROUND THE WORLD, FOR MANAGING OUR RISK AND OUR CAPITAL M WE FELT THAT WAY SINCE THE BEGINNING OF BARCLAYS CAPITAL AND WE FEEL THAT WAY TODAY.WHEN I WAS TALKING TO THE STAFF AT LEHMAN BROTHERS YESTERDAY WHO ARE NOW GOING TO BE A PART OF THIS, THEY ARE VERY EXCITED TO BE PART OF A UNIVERSAL BANK WITH A STRONG BALANCE SHEET AND STRONG CAPITAL BASE.
BARTIROMO: AS FAR AS THE CREDIT ISSUES, DO YOU WANT TO CHARACTERIZE YOUR TIER 3 ASSETS, PEOPLE MAY SAY, YOU'RE TAKING ON THESE BAD LEHMAN ASSETS AS FAR AS WHAT IS ON THE BOOKS CAN YOU CHARACTERIZE WHAT YOU'RE LOOKING AT AS FAR AS YOUR OWN BALANCE SHEET RIGHT NOW?
DIAMOND: THE ASSETS WE TOOK ON ARE ONLY THE ONES THAT WE CLOSE TO TAKE ON IN THOSE POSITIONS. WE IN BAR CAP WE HAVE LEGACY ISSUES AS WELL AND WE CONTINUE TO WORK THOSE DOWN. AND I THINK AS I LOOK BACK ON THE YEAR, IT'S THOSE FIRMS THAT HAVE BEEN ABLE TO MANAGE THE LEGACY ASSETS. EVERY BANK HAS THEM. EVERY BANK IS MANAGING LIQUIDITY AND MANAGING ASSETS THAT THEY'D RATHER NOT HAVE ON THE BALANCE SHEET RIGHT NOW. BUT THOSE FINANCIALS INSTITUTIONS THAT HAVE BEEN ABLE TO FOCUS ON MANAGING THE RISK, MANAGING THEIR COSTS, STAYING CLOSE TO THEIR CLIENTS, AND DRIVING PERFORMANCE ARE THE ONES THAT HAVEN'T BEEN SWAMPED UNDER BY THE LEGACY ASSETS AND ARE ABLE TO TAKE ADVANTAGE OF THE OPPORTUNITIES. IT'S REALLY HARD OUT THERE, MARIA.THE MARKET CONDITIONS ARE VERY, VERY DIFFICULT.BUT THE KIND OF OPPORTUNITIES WE SEE TODAY DON'T COME UP WHEN EVERYTHING IS PERFECT. SO THE TURMOIL DOES PRESENT SOME OPPORTUNITIES.
BARTIROMO: CLEARLY.BOB, GREAT TO HAVE YOU ON THE PROGRAM. WE SO APPRECIATE YOU TALKING TO US REALLY FROM THE FRONT LINES OF ALL OF THIS. THANK YOU.
DIAMOND: THANKS
BARTIROMO: BOB DIAMOND, PRESIDENT OF BARCLAYS THERE ON HIS TRADING FLOOR.
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