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Barclays boss waives bonus as bank rocked by new Qatar allegations Barclays boss waives bonus as bank rocked by new Qatar allegations
(about 7 hours later)
Antony Jenkins, the chief executive of Barclays, is to waive his 2012 bonus as the bank took another reputational hit when it emerged it is under investigation over its relationship with Qatar at the height of the financial crisis. Antony Jenkins, the chief executive of Barclays, is waiving his right to a bonus of more than £1m after details of the likely payout attracted widespread criticism.
The Qataris were key contributors to a crucial £7.3bn lifeline to Barclays following the credit crunch which allowed the bank to avoid a taxpayer bailout. Jenkins's decision came ahead of an appearance next week before MPs and peers on the banking standards commission where he would have faced questions about the bonus the bank had planned to award to him.
The Serious Fraud Office and the Financial Services Authority are looking at whether Barclays lent Qatar funds to invest in the bank, the Financial Times reported. His move prompted union calls for other top bankers to follow his lead. George Osborne welcomed the announcement and called on banks to be "very sensible" about bonuses.
Jenkins's decision to waive his bonus was announced shortly after the story appeared and before his appearance next week before MPs and peers on the banking standards commission. The head of the bank's remuneration committee, Sir John Sunderland, appeared before the commission on Wednesday, when he faced scrutiny about his plans to offer Jenkins a "seven figure" bonus for 2012. Further pressure mounted on Barclays when it faced fresh allegations on Friday about its relationship with Qatar at the height of the 2008 financial crisis. The Qataris were the main contributors to a £7.3bn lifeline to Barclays that allowed it to avoid a taxpayer bailout. The Financial Times reported that the Serious Fraud Office and the Financial Services Authority are investigating whether Barclays lent Qatar funds to buy shares in the bank.
Jenkins was promoted to chief executive at the end of August after Bob Diamond quit in the wake of the bank's £290m fine for rigging Libor. Jenkins's decision to waive his bonus was revealed shortly after the FT report appeared. Appointed in August following the sudden departure of Bob Diamond in the wake of the Libor rigging fine, Jenkins said: "The year just past was clearly a very difficult one for Barclays and its stakeholders, with multiple issues of our own making besetting the bank. I think it only right that I bear an appropriate degree of accountability for those matters, and I have concluded that it would be wrong for me to receive a bonus for 2012 given those circumstances."
Barclays would not comment on the latest twist in the investigation into the fundraising and neither would the SFO or the FSA. In July the bank admitted that its finance director, Chris Lucas, and former directors were under investigation by the FSA about the 2008 fundraising and disclosures that were made about fees "under certain commercial agreements" in June and November that year. By August, the SFO had launched an investigation in to the payments. As well as being fined £290m for rigging the benchmark Libor rate, the bank has set aside £2bn to pay claims for mis-selling payment protection insurance. Jenkins' bonus announcement will put pressure on António Horta-Osório, chief executive of Lloyds Banking Group, and Stuart Gulliver, boss of HSBC, who are also due to appear before the banking commission, set up in the wake of the Libor crisis, next week. They could also face a grilling about their bonuses.
The new allegations appear to be the latest strand in that inquiry, and the FT said that the identities of any borrowers and the size of the alleged loans were unclear. Stephen Hester, chief executive of Royal Bank of Scotland, has already waived his bonus after last year's computer crisis. However, RBS is still embroiled in bonus controversy as the bailed-out bank will set aside a bonus pot for its investment bankers despite facing an expected £500m fine for its own Libor-rigging activities.
Jenkins, who is on a potential £8.5m a year package, said: "The year just past was clearly a very difficult one for Barclays and its stakeholders, with multiple issues of our own making besetting the bank. I think it only right that I bear an appropriate degree of accountability for those matters, and I have concluded that it would be wrong for me to receive a bonus for 2012 given those circumstances." Unite national officer Dominic Hook said: "It's refreshing to see Antony Jenkins waive his bonus. It should send a message to the high rollers in banking that bonuses are unacceptable while ordinary people suffer the austerity forced on them by the colossal errors of the banking elite."
Earlier this week the bank had faced criticism for sounding out investors about a potential bonus of at least £1m – his maximum entitlement is 2.5 times his £1.1m salary – given the Libor fine and the cost of the payment protection insurance misselling scandal, which has now reached £2bn for Barclays. The bank may also need to set aside more to compensate customers missold interest rate swaps. In an effort to restore its reputation, Barclays has called in Tony Blair's former spin doctor Alastair Campbell to provide occasional advice. Campbell works with public relations group Portland, hired by Barclays last year. Portland is run by another former Blair adviser, Tim Allan.
"I am aware of considerable speculation about, and public interest in, the question of whether I will be awarded a bonus in respect of my performance in 2012," he said. It said it had been "engaged by Barclays to provide communications support". Campbell referred queries to Portland.
"To avoid further unnecessary public debate on this matter, I wish to make clear that I concluded early this week that I do not wish to be considered for a bonus award for 2012, and I have communicated that decision to the board," Jenkins said. Barclays would not comment on the latest allegations about its 2008 fundraising and neither would the SFO or the FSA. Last July the bank admitted that its finance director, Chris Lucas, and other former directors, were under investigation by the FSA about the 2008 fundraising and disclosures that were made about fees "under certain commercial agreements" in June and November that year. The SFO also launched an investigation into the payments.
The new chief executive does not appear to have told the board before Sunderland's appearance at the banking commission on Wednesday. Sunderland would only describe the possibility of a £1m bonus as speculation and stunned members of commission by saying he would still have handed Diamond a bonus for 2011 in spite of the Libor fine. The new allegations appear to be the latest strand in that inquiry. The identities of any borrowers and the size of the alleged loans are unclear.
Stephen Hester, the boss of Royal Bank of Scotland, has already waived his 2012 bonus but it is not yet clear what will happen for his counterpart at bailed-out bank Lloyds Banking Group, António Horta-Osório. Nor is it known whether the bosses of HSBC and Standard Chartered, both of which were hit by large penalties by US regulators last year, will be awarded or accept bonuses. The continuing investigation is another hurdle for Jenkins as he attempts to persuade the public that he can improve the reputation of the bank. He intends to set out his strategy to restore the bank's reputation on 12 February.
The head of the bank's remuneration committee, Sir John Sunderland, was criticised this week for telling the banking commission that Diamond deserved a substantial bonus despite the Libor scandal that led to his sudden departure.