Barclays has a lot to learn about transparency
London Briefing:When Antony Jenkins promised MPs he was intent on “shredding” the “self-serving” legacy of former Barclays boss Bob Diamond, no doubt he meant it as an assurance that the bank has changed its ways. But it was an unfortunate choice of words, given recent revelations that an explosive report into the bank’s out-of-control culture had ended up, literally, in the shredder.
The damning dossier detailed a culture of bullying and intimidation at Barclays Wealth, saying the division had been ruled by the pursuit of revenue “at all costs”. The report was apparently deliberately withheld from the Barclays board (via the shredder) and its discovery is just one of a series of blows to the bank’s reputation in recent months. If Jenkins, who took over as chief executive last August, had hoped the worst was over for Barclays once Diamond fell on his sword, then he was sorely mistaken.
Finger in every pie
Along with chairman Sir David Walker, Jenkins was grilled by MPs at Westminster for several uncomfortable hours yesterday. The chair of the Banking Standards Commission, MP Andrew Tyrie, was fiercely critical of the bank, accusing it of having a finger in the pie of every scandal.
“It doesn’t matter what the scandal is, Barclays seems to have a finger in the pie, quite a big one. That’s a pretty awful inheritance,” Tyrie said.
It’s a hard accusation for Barclays to defend. Just hours before the Barclays chairman and chief executive submitted to their Westminster interrogation yesterday, the bank had surprised the City by revealing it has set aside another £1 billion (€1.15 billion) to cover mis-selling. It is adding £600 million to the compensation bill for Payment Protection Insurance (PPI), taking the total to £2.6 billion, and is also adding an additional £400 million to the cost of compensating small businesses who were mis-sold interest rate swaps, taking that bill to £850 million.
At the height of the financial crisis four years ago, Barclays looked to have pulled off a real coup by persuading the Gulf state of Qatar to invest in its shares, enabling the bank to avoid being bailed out by the British government.
The Barclays board, then led by Diamond, was jubilant at escaping the restrictions that accepting taxpayers’ cash would have subjected it to, as in the case of rivals Lloyds Banking Group and Royal Bank of Scotland.
In particular, they believed they would be able to continue to pay some of the industry’s biggest bonuses to their top traders and bankers just as they had done in the past.
They were wrong about bonuses – Jenkins waived his payment last week – and now, along with the mis-selling and Libor rate-rigging scandals, even that Qatar deal is being scrutinised.
The authorities were already looking into fees paid for the fundraising, but now the bank stands accused of having bankrolled the £6 billion Qatar investment, in contravention of financial regulations on fundraising. The Serious Fraud Office and the Financial Services Authority are both investigating.
The Qatar deal was one of the many misdeeds – some alleged but most already admitted – that the Barclays bosses were called on to explain at Westminster yesterday. They proved less than informative on this fund-raising, ducking questions because of the ongoing investigation.
They were only slightly more forthcoming on the subject of bonuses, promising there would be a “material” cut in the bonus pool to reflect the impact of the scandals, but giving little detail. And, after having been accused by another commission member, former Tory chancellor Lord Lawson, of “industrial-scale tax avoidance” at its structured capital markets unit, Jenkins told MPs there would be “material changes” in the way the division was run; again, no detail was provided.
Jenkins has repeatedly expressed his determination to transform the culture at Barclays and will next week deliver his detailed strategy for the bank, along with full-year results.
His appearance before MPs yesterday was certainly in marked contrast to the swagger of his predecessor, Diamond, who enraged lawmakers last year with his defiant display in the wake of the Libor scandal. Jenkins’s demeanour may be more humble but, despite his promises to be more open, extracting information from the bank seems just as hard as ever.
There weren’t many laughs at yesterday’s session but Tyrie got some guffaws when he displayed a document provided by Barclays that was so heavily redacted barely a single word was left legible. It seems it’s easier to talk about a more open culture than it is to actually pursue it.
* Fiona Walsh writes for the Guardian newspaper in London