Bob Diamond to return to City with Panmure Gordon buyout

A former Barclays boss branded the "unacceptable face of banking" by Labour peer Peter Mandelson is set to make a high-profile return to the City.

Bob Diamond, head of investment banking at the lender during the financial crisis, is bidding to buy Panmure Gordon, one of London's oldest stockbroker.

The Boston-born businessman is a controversial figure. He joined Barclays in the mid-1990s but came in for scrutiny for his lavish pay deals, leading Mandelson to launch his attack in 2010, after the banker was awarded a multimillion-pound bonus.

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Diamond took over the whole bank in 2011 but was forced to stand down a year later, under pressure from investors in the wake of the Libor fixed scandal.

Since then, he launched Atlas Mara, an investment firm focused on Africa, and Atlas Merchant Capital, which made its first acquisition in Europe last month, buying out the Athens-based consumer finance arm of France's Credit Agricole, reports The Guardian.

It is through Atlas Merchant that Diamond is returning to the City, making a joint bid with Qatari investment firm QInvest for Panmure Gordon.

Atlas Merchant would take a majority stake after the transaction, while QInvest will maintain its existing 43 per cent interest.

Panmure's board has recommended the offer, which values it at £15.5m. The loss-making business dates back more than 140 years and once counted David Cameron's father Ian among its senior team.

However, it has struggled in recent times, posting a post-tax loss of £4m and statutory loss of more than £16m last year, says the Financial Times. Its shares had tumbled from a high of £23.50 per share in 2006 to just 60p this week. They jumped 66 per cent to close to £1 this morning.

Atlas Mara has seen its share price slump from $12.50 to $2.15 today.