The credit crunch and recession were largely blamed on banks, who everyone’s now looking at to fund a recovery. Barclays Corporate boss Ray O’Donoghue discusses finance pressures with Steve Dyson
It was a shiny grey suit from C&A and an impressive eagle that landed Ray O’Donoghue his first real job with Barclays Bank in 1980.
The 19-year-old had enjoyed a ‘gap year’ after A-Levels at St Thomas Aquinas school in Kings Norton, Birmingham, and a love of punk rock meant he dragged himself to a job interview with Lloyds Bank dressed in a jumper, scruffy jeans and Dr. Martens boots.
“You’re kind to call it a ‘gap year’,” smiles a reminiscent O’Donoghue. “It was more a case of not being at school, not being in a career, messing around earning bits of money working in supermarkets.
“I didn’t know what to do, and the careers office advised banking, which ended up in an interview with Lloyds. I had the idea that what mattered was who you were, not how you dressed, and turned up pretty scruffy. I soon realised first impressions were important when they didn’t give me the job.
“My dad was horrified, and took me out to buy a suit before my next interviews. I’m pretty sure it was a ‘Man at C&A’ suit – shiny, grey and check – the kind of thing you wouldn’t be seen dead wearing, but both Barclays and Nat West offered me jobs. Why Barclays? I chose them because I liked the eagle logo!”
The bank made a lasting impression on O’Donoghue, and he’s still with them nearly 34 years later, now managing director for the Midlands and Wales region for Barclays Corporate, working from offices at Snow Hill, Birmingham.
A career development programme in his early years gave him a taste of the bank’s different sectors – from personal customers to retail, and from asset finance to offshore private banking. The latter took him to Spain and Gibraltar, where he “grew up quickly” as the huge decisions he was making belied his age.
He returned to London in corporate banking, and after making his mark and several promotions he was sent back to the Midlands in 1998 to set up a regional division for ‘big’ corporate banking. He soon became responsible for mid-corporate banking as well, and his region spread to Wales, at one time also taking in the south west.
It’s a huge sector that includes thousands of businesses, ranging from medium-sized companies turning over £5m a year to big corporates with revenues of £3.5bn.
Asked why he’s stayed with Barclays for so long, Donoghue, now 53, says: “Every time I got bored or frustrated they moved me to a different part. And I loved the people side. Once I’d got through the mundane processing, the longer I stayed the more I thought ‘I’m quite enjoying this’.
“Barclays gave me a chance to work in London and travel. I got to build teams, and the more I understood, the wider scope I was given. Once I started on the business side – corporate banking – that’s what I really liked, because it’s so client-focused. I wouldn’t say I’m great at project management or on the technical side, but the people, relationships and interaction have been common denominators throughout my career.”
O’Donoghue admits his ‘people focus’ made the banking crash of 2008 – and controversies such as Libor rate-fixing, the mis-selling of Payment Protection Insurance and inflated bankers’ bonuses – “the most difficult time in my career”. But he coped by insisting on being resolutely honest and upfront about Barclays’ failings.
“I don’t think anyone was more upset than the staff themselves,” he says. “You felt let down by what happened, and felt for customers. Trust takes years to establish, and it can be lost in five minutes.
“I remember asking staff to call customers and apologise about what had happened. What came back from customers was a resonating endorsement of what people on the ground were doing for them. Customers said things like: ‘I don’t recognise that in my day-to-day business with you.’ This positive feedback gave us a massive lift.
“We’ve had to work very hard to maintain levels of service, and to put things right. But being upfront, apologising and dealing with issues head on – honesty was the best policy.”
O’Donoghue deals with any day-to-day customer complaints in the same way: “If I receive a complaint, I pick up the phone and go to see the customer. They’ve often said something like ‘I don’t expect you to do anything’, and so when I turn up they’re shocked, and that often diffuses problems. Face-to-face is good, treating everybody as you’d like to be treated yourself. Handling complainants well can make them one of the bank’s biggest promotional advocacies.”
While the credit crunch and banking controversies were challenging times, O’Donoghue still enjoys his role helping businesses to survive and grow, and the fact that his people-focus makes that work.
“Banking is about relationships with people, and I really do think Barclays has led the way with that. We’ve been top with employee engagement for many years, and number one for customer satisfaction regionally for seven or eight years. That’s what I’m most proud of. If you get those two things right in any company, you’ve got a good business, and revenue will often look after itself.”
O’Donoghue encourages staff to take part in Barclays’ various programmes of supporting communities and trying to get people back to work. The bank has taken on thousands of apprentices, and is now trying to increase that by linking directly with schools for work experience, making apprenticeships easier to access.
“Our citizenship agenda is great for staff because they feel they’re contributing” he says.
“Our staff motivation shows through in employee retention: there are people in the Midlands who’ve worked here for 30 and 35 years, and they’re still working hard. I know them and their families, and this helps us through difficult times. We’ve got a great mix of youth as well, and the old heads helped guide youngsters through the recession.”
Recessions, of course, bring tough moments – like when funding streams for particular struggling companies have to be cut off. How difficult are those decisions that result in administrations, bankruptcies and redundancies?
“Such times are hard for both sides,” he concedes. “The customer and the bank. But if you understand the company well enough, and the business they’re in, you’d have been working with that customer to try to find solutions. It’s very rare that you suddenly wake up to huge issues. You work with them so the issues don’t become big.
“In this last recession, there were fewer administrations and corporate failures because banks worked hard to find solutions. Some observers criticised banks for occasionally propping up what they call ‘zombie’ companies. But if companies are trading, covering costs, employing people, why give up? The more time, the more chance of a solution.”
Talking of solutions, O’Donoghue is convinced that a recovery – albeit a slow one – is happening, quoting various statistics showing rising confidence: “29% of our companies are looking at increasing pay, and similar numbers are looking to take on apprentices.
“The Government says the recovery is ‘fragile’, and I wouldn’t disagree. But exports and manufacturing are there; unemployment is coming down; and more people have investment on their agenda. In hard terms that might not be happening yet, but it’s coming. We’re starting to see more mergers and acquisitions, recruitment and stocking levels are up, in a sensible way, avoiding some of the big peaks that caused financial problems.
“People are rightly cautious, which makes the pace of recovery gradual. We need banks and customers to keep talking, working together to come out the other side with the diligence we had during the recession. It’s about the strength of relationships, the degree of dialogue and partnership, saying: ‘This is the challenge, how do we get around it?’”
I highlight criticism that banks aren’t lending enough to help businesses invest in the future, and business leaders’ constant demands for finance to secure long-term growth – from capital investment in new equipment to training for highly-skilled workforces desperately needed in sectors like engineering.
O’Donoghue nods, but says: “There’s not yet a huge demand for money. I want to continue to grow our balance sheet, but I’m not forecasting it going through the roof. Barclays’ ‘Funding for Lending’ money is up 3.5%, but I recognise it’s still hard for smaller businesses to get credit. We are looking to lend more, to build relationships and to use government-supported products.
“Did you know 80% of all credit applications are still sanctioned? Yes, there’s criticism of longer term funding, but our job is giving people as much advice as we possibly can on different types of structures for finance. We need to be more sophisticated around trade and funding for exports. This is the big challenge for all banks, and it’s a joint thing: customers, government agencies and banks have to make this work in a safe, efficient way.”
O’Donoghue points out how Barclays Corporate continued to strengthen its regional team at a senior level despite the recession, preparing the skills needed once the recovery started. He mentions the likes of Keith Webb, who arrived from Santander, Peter Corcoran, from the Clydesdale Bank, Matthew Porter, from Fortis, and Andrew Budenberg, from the Bank or Ireland.
“These senior skills will help levels of engagement and cooperation between banks and the Government, MPs and agencies, which is almost at an unprecedented level as people try to pull together for solutions.
“There’s conventional bank loans and overdrafts; private equity; business growth funds; private investors; bonds in capital markets; and various partnerships can use combinations of all of these. Barclays has the breadth of knowledge to go through all the structure options with businesses and to point them in the right direction.”
But whether it’s agreeing bank loans of hundreds of millions of pounds, or deciding if struggling firms can survive, O’Donoghue must find his job stressful. How does he cope?
“Physical exercise,” he says without hesitation. “My job’s not physical, but I do get mentally tired. I used to play football and rugby, and go running, but recently I took up cycling for charity, and started rowing last year.”
O’Donoghue’s cycling involved a 1,000-mile team ride from Land’s End to John O’Groats that raised more than £400k for children’s hospices in 2009. And last year, he took part in the Cornish Gig Row Challenge, rowing 28-miles to the Scilly Isles, raising more than £15k for the Bath Rugby Foundation.
Away from work and exercise, O’Donoghue lives in a village near Inkberrow, Worcestershire, and has two daughters: Chloe, aged 14, and Emma, 18. And it’s when we discuss the woes of parenting that he returns to his own teenage years – which is where we came in.
“I was so self-conscious as a lad. You know I’m six-foot, five-inches? Well, I’m proud of my height now, but as a teenager, I used to chop the heels off my shoes to not look so tall.”
And it’s this 1980 image of O’Donoghue I’ll leave you with: a spindly 19-year-old punk in a shiny grey suit with chopped off heels. Someone on that Barclays interview panel 34 years ago must have seen something in him.
A feast inspired by Roald Dahl’s Willy Wonka
“It’s a whole chicken dinner, so please eat in one mouthful,” our waitress advises, offering what look like mini-Scotch eggs on cocktail sticks.
We crunch, and our eyes meet as hot gravy infused with roast chicken, stuffing and roast potatoes spills across our tongues. Almost as one, we spurt: “Willy Wonka!” agreeing this.
Michelin Star venue was inspired by Roald Dahl. After hors d’oeuvres, Ray O’Donoghue chooses lamb shank for starters – disbelieving it’s a first course. Miniscule slices of tender lamb are smothered with tomatoes, pickled onion and cumin.“Very tasty,” he says, before tucking into cod, cooked in fennel, with whitebait and broccoli stems. “Lovely – and I’m sure that was a poached egg no bigger than a pea!”
We were choosing from a three-choice lunch menu at £32 a head. I begin with Jerusalem artichoke, its caramelised flavours enhanced by egg yolk and chorizo snippets. For mains, my pork is topped with rhubarb, a nicely sharp change to apple, and I love the tiny crackling portions perched on top. ‘Textures of chocolate’ is dessert across the table – “I didn’t know there were so many ways to present chocolate” – while I indulge in soft, green and creamy cheeses with wafer-thin crackers (£2.50 extra).
We share a bottle of 2011 Ken Forrester FMC Chenin Blanc, from Stellenbosch, South Africa, which O’Donoghue – a bit of an expert – says is the nicest Cape white he’s ever tried. Then it’s back to Willy Wonka, with chocolates over coffee containing the “popping fizz tingle” you used to buy in quarter pound bags from sweetshops as kids. Adams, O’Donoghue concludes, is “Birmingham’s new hidden secret”, and he promises himself a return visit.
Adam’s restaurant, 21a Bennetts Hill, Birmingham B2 5QP. www.adamsrestaurant.co.uk. Call: 0121 643 3745, email: firstname.lastname@example.org, Twitter: @RestaurantAdams