Who runs the banks?

These two bankers could not be more different. Mr Leigh-Pemberton - now Lord Kingsdown and just turned 85 - was the essential country banker; a gentleman farmer from Kent who wafted up the hierarchy at NatWest, which he joined as a director on its south-east regional board in the 1970s. Clearly there was more to Mr Leigh-Pemberton than met the eye. From NatWest, where he was chairman from 1979 to 1983, he progressed to the Bank of England, where he was Mrs Thatcher's choice of governor for two terms until 1993. Despite that, the image was that of the effortless amateur as banker, just what one would expect from a man who tended bee hives on the roof of the Bank of England and whose country home boasted its own Eton fives court.

Contrast the English squire-banker with Bob Diamond, the American who became chief executive of Barclays in January 2011. While Mr Diamond's CV looks accomplished, there is nothing effortless about it. He's not blue-collar, but he's not Ivy League, either. Which means that Mr Diamond had to graft - all the way through the trading floors of CS First Boston and Morgan Stanley, US investments banks where success comes only to the leanest, meanest, smartest and toughest. Sure, Diamond Bob has tried to soften his image - he likes to tell us that he supports Chelsea in 'soccur' - but somehow it remains as taut as the tension lines around his mouth. Still, that's what happens when you're on the end of so much public disapproval. It's enough to make a man strong-arm his employer into paying the extra £6m income tax that'll be due when he has to move from the US to the UK just to become the chief executive.

So will the real banker stand up - Mr Diamond or Mr Leigh-Pemberton. True, there is an element of caricature about both. But both are real and both are of their time. If they are worlds apart it is because banking in 1980 and banking in 2012 are worlds apart.

THEN...The gentleman farmer banker Mr Leigh-Pemberton - now Lord Kingsdown

Background checks

We know how much banking has changed in that time. Little known - and still less quantified - is how much the background and qualifications of the people running the UK's top banks has changed.

Where once the average director of a Big Four bank had attended public school - quite likely Eton - followed by an Oxbridge college and perhaps a spell in the Guards, now he is much more likely to have been educated in a state school followed by a red-brick university and to have attained a professional - most likely accountancy - qualification. In 1980, chances are, he had collected a title along the way (though if he set off with an hereditary title, that was no disadvantage). Today, a title would be much less likely (and a hereditary one - forget it), though a gong of some sort would be a decent bet. And we keep saying 'he', though today that's more likely - or should we just say 'less unlikely' - to be 'she'.

We'll begin with the sexual emancipation of Britain's banking parlours - ho, ho - in a moment. But, first, let's explain what we're doing and where the information comes from.

Back in 1980, we ran a detailed breakdown of the background and connections of all 105 directors who sat on the boards of what were then labelled 'the Big Four' - Barclays, Lloyds, Midland and National Westminster, the clearing banks that dominated banking in Britain. This produced the statistics shown in the left-hand column of the main table. Fast forward to the present and we still have four big banks. Midland was subsumed into HSBC in 1992 and NatWest was reversed into The Royal Bank of Scotland (RBS) in 2000 as Fred 'the Shred' Goodwin got into his stride. For the other two, the names remain the same, though Lloyds has been through all sorts of trauma.

So how does the make-up of the boards compare between now and then? Back to the women. In 1980 the solitary female among 104 men was Dame Rosemary Murray, an Oxford-educated academic who would become the first female vice chancellor of Cambridge University. Today there are 10 women among 46 men - that's got to be an improvement, hasn't it? Not much. All 10 women are non-executive directors and most of those make their career as non-executive directors, which means they don't run much except their busy lives. There hasn't been a female executive director of a Big-Four bank since March 2011 when Helen Weir was eased out as head of UK retail banking.

NOW...The super highly paid Bob Diamond

Then again, there aren't that many executive directors at all. Today, out of 56 directors at the Big Four only 14 are executives, and that figure includes the four chairmen, who are nominally non-executive. Put another way, only HSBC has executive directors - and just two of them - who are neither the chairman, the chief executive nor the finance director. In part, we can blame the credit crunch for this. Boards have slimmed down since banks went through the trauma of the crunch. Back in 2005, for example, Lloyds TSB had 16 directors, seven of whom were executives (and, incidentally, two were women); RBS also had seven executive directors out of 18.

A bigger factor has been successive layers of corporate governance, which has redefined the functions of a board. Today it is no longer charged with running a company; rather, its principal function is to keep tabs on those who do. For that, directors need qualifications, ability and expertise. Under those headings, how does the class of 2012 compare with 1980's?

One trouble is that these labels are vague. Do qualifications include who you know as well as what you know? If so, 1980's batch may be better qualified. At least there is a homogeneity of background and network of City contacts evident in 1980 that's missing today. That's neatly illustrated by the public-school connection. In 1980, 66 out of 105 directors had attended public schools, and more than a third of those had gone to Eton. At Barclays, 12 out of 29 directors were Old Etonians.

Today, the public-school connection is much diminished and the Eton link almost vanished. Only three of today's directors are Old Etonians - James Hughes-Hallett, the chairman of Hong-Kong-based conglomerate John Swire, Sam Laidlaw, the chief executive of Centrica, and Sir Simon Robertson, the chairman of Rolls-Royce. By chance - presumably - all three are directors of HSBC.

Similarly, the importance of an Oxbridge education is much less, though that could not be said of a university education in general or of a professional qualification.

Back in 1980, by and large directors attended an Oxbridge college or did not go to university. That might be because they were bright schoolboys who joined the bank in their teens and worked their way up. Alternatively, if they were from a certain background, they chose a stint in an elite battalion of the army (the Coldstream Guards or Grenadier Guards were much favoured) before pottering off to the City. Examples of the former were several, especially at comparatively meritocratic Midland Bank, where in 1980 the chief general manager (equivalent to today's chief executive) Stuart Graham had joined the bank as a 16-year-old in 1938 from Kilburn Grammar School. There were more examples of the latter, a good one being Robin Herbert, a non-executive at NatWest. After Eton and Christ Church College, Oxford, and a spell in the Royal Horse Guards, Mr Herbert became chairman of Leopold Joseph, a merchant bank caricatured as 'the bank to The Rolling Stones'. However, what made Mr Herbert unique among 1980's directors yet provides a bridge with today's is that he had an MBA from Harvard.

Today there is a smattering of Ivy League graduates and rather more MBAs, at least three of whom got their business degree from Harvard - Rhona Fairhead at HSBC, and Marcus Agius and Dambisa Moyo at Barclays. Equally favoured for an MBA is France's top business school, Insead, where Sam Laidlaw (HSBC), António Horta-Osório (Lloyds) and Sir Philip Hampton (RBS) got theirs. Throw in at least 14 accountancy qualifications, a few actuaries, a lot of masters degrees and bachelors degrees by the score and it is clear that today's directors have more formal qualifications than 1980's.

They are also a far more cosmopolitan bunch. We can't say that back in 1980 every bank director was a UK citizen, but most likely they were because all 105 were educated at a British school. Today 18 of the 56 are not UK citizens. That includes one US-born chief executive (Mr Diamond) and one Portuguese (Mr Horta-Osório). The other non-Brits are all non-executive and most are Americans, though - understandably given its Chinese connection - HSBS has three Hong Kong Chinese directors.

The young and the old

Different nationalities lead to different connections. Back in 1980 the (most likely) all-British line up meant that directors had close links with the City and British industry. It was almost axiomatic that leading directors of all the top insurance companies would be clearing-bank directors. Links with industry meant that the chairman or managing director of at least 18 companies that would have been in the FTSE 100 index (had it been around in 1980) had seats on bank boards. At least as many Footsie-equivalent companies again were represented in an overlapping network of non-executive directorships which meant that at every bank there were directors who sat on boards where there were representatives of other clearing banks.

Today, FTSE 100 companies are sparsely represented. Just 15 Footsie companies have directors on a big-four board and, of those, just five are the chairman or the chief executive.

While connections with British industry don't burrow so deeply nowadays, links across the globe spread more widely, though still thinly. Back in 1980, possibly the only overseas boardroom link was at Midland Bank, where a director was also the chairman of Banque Belge. Today, directors or consultants of, for example, Eli Lilly, Ford, China Telecom, Acer and News Corporation have seats on the Big Four's boards. That's in keeping with a trend of our time - globalisation. In keeping with another lucrative trend, today's boards have links with private equity, a branch of the finance industry that barely existed in 1980. So, for example, on the Barclays board, Alison Carnwath is also on the board of ISIS Equity Partners; Reuben Jeffrery advises TowerBrook Capital Partners, which was spun out of George Soros’s funds, and Sir John Sutherland, the former boss of Cadbury Schweppes, advises CVC Capital Partners.

For a minute, let's stick with Sir John. He's representative of a category of big-four director much diminished since 1980 - executives who run, or have run, businesses outside the services sector. Back in 1980, they proliferated. Today - though, happily, every bank has at least one - they are a comparative rarity. That may be a comment on the way the UK’s industry has evolved away from manufacturing; though it has evolved towards finance, yet the insurance industry no longer has any representation on the Big Four's boards.

Number of directors

Less expertise, more complexity

So how do we characterise today's Big-Four boards? More than anything, what differentiates them from the class of 1980 is that they are dominated by a cadre of professional non-executive directors - capable people who can, as it were, be executive non-executives; that is, non-executive is what they do.

For the cause, we need look no further than the effect of successive layers of corporate-governance regulations – rules that emphasise the correct appearance of running public companies, not just banks. This was unknown in 1980, which is why the Big-Four boards of that year had more in common with the boards of the late 19th century - when Barclays, for example, was run by successive generations of Bevans, Tukes and Goodenoughs - than with today's.

But it is hard to argue that the present structure has brought improvement. Give or take, it was in place five or six years ago yet it neither slowed nor deflected RBS and Lloyds from the mad helter-skelter that took them close to corporate self-immolation. And there is nothing to imagine that today's directors would do any better if placed in a similar situation. In large part that's because, the executive directors aside, today's directors have much less expertise in banking than their forbears of 32 years ago. That's unfortunate because banking is more complex than it was 32 years ago – arguably too complex even for the boss to understand. But that might also help explain why the boards of today's Big Four seem to be in awe of the likes of Bob Diamond.

The Big Four – then and now