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Barclays report cannot cure systemic ills of the banking industry Barclays report cannot cure systemic ills of the banking industry
(about 1 hour later)
Barclays put the pursuit of profits before the needs of its customers. It was a bank that sailed close to the wind in its dealings with the regulators. The egomaniac excesses of its senior executives has left an institution founded on quaker principles reviled by the public. Something went seriously wrong with the bank's culture during the financial crisis and the bubble years that preceded it. Barclays put the pursuit of profits before the needs of its customers. It was a bank that sailed close to the wind in its dealings with the regulators. The egomaniac excesses of its senior executives has left an institution founded on Quaker principles reviled by the public. Something went seriously wrong with the bank's culture during the financial crisis and the bubble years that preceded it.
These are the conclusions of the 244-page report into the business practices at Barclays conducted by the City lawyer Anthony Salz. As a statement of the blindingly obvious, the 34 recommendations don't come cheap: the bank will have to stump up £17m for the privilege of learning that it should make sure pay is linked to long-term success, that it should be easier for junior staff to express misgivings, and that Barclays should better understand the needs of its customers. These are the conclusions of the 244-page report into the business practices at Barclays conducted by the City lawyer Anthony Salz.
As a statement of the blindingly obvious, the 34 recommendations don't come cheap: the bank will have to stump up £17m for the privilege of learning that it should make sure pay is linked to long-term success, that it should be easier for junior staff to express misgivings, and that Barclays should better understand the needs of its customers.
These are hardly radical suggestions and Antony Jenkins, the man given the job of restoring the bank's battered reputation, will have no real trouble in implementing them. Whether they meet the scale of the challenge is another matter entirely.These are hardly radical suggestions and Antony Jenkins, the man given the job of restoring the bank's battered reputation, will have no real trouble in implementing them. Whether they meet the scale of the challenge is another matter entirely.
Salz is certainly right in saying that there needs to be a culture change at the bank. But saying something needs changing is a lot more difficult than effecting it, and Jenkins will need to make sure that he is getting more than simply superficial buy-in from the bank's senior team. In all likelihood, many of those who did well when the bank was run by John Varley and Bob Diamond are likely to be deeply cynical about the new-broom regime, but for the time being find it expedient to keep their own counsel. Salz is certainly right in saying that there needs to be a culture change at the bank. But saying something needs changing is a lot more difficult than effecting it, and Jenkins will need to make sure that he is getting more than simply superficial buy-in from the bank's senior team.
Nor – and this is a point correctly made by Salz – can the lowering of standards at Barclays be seen in isolation. True, the bank has allowed itself to become the City's pantomime villain as a result of Libor fixing scandals and stratospheric pay packets, but it was certainly not the only financial institution to have sinned. Other banks, Royal Bank of Scotland, HBOS and Northern Rock among them, have also paid the price of over-rapid expansion. Other banks, including Lloyds Banking Group and HSBC, have been guilty of wrong-doing. In all likelihood, many of those who did well when the bank was run by John Varley and Bob Diamond are likely to be deeply cynical about the new-broom regime, but find it expedient to keep their own counsel for the time being.
There is, to be blunt, a systemic problem with the banking industry that the Salz report does not address, and could not – given its limited remit – ever address. It is as if one of the big trade unions had asked a former member of the Labour government to advise it on how to repair its public image after the winter of discontent. Mrs Thatcher did not try to change the culture of the trade unions; she took action to make them less powerful. The equivalent today would involve breaking up Barclays to ensure that the "customer comes last" approach of the investment bankers never again seeps into the retail banking division. That would be a real culture change, and other banks would quickly get the message. Nor – and this is a point correctly made by Salz – can the lowering of standards at Barclays be seen in isolation. True, the bank has allowed itself to become the City's pantomime villain as a result of Libor fixing scandals and stratospheric pay packets, but it was certainly not the only financial institution to have sinned.
Other banks, Royal Bank of Scotland, HBOS and Northern Rock among them, have also paid the price of over-rapid expansion. Other banks, including Lloyds Banking Group and HSBC, have been guilty of wrongdoing.
There is, to be blunt, a systemic problem with the banking industry that the Salz report does not address, and could not – given its limited remit – ever address.
It is as if one of the big trade unions had asked a former member of the Labour government to advise it on how to repair its public image after the winter of discontent. Margaret Thatcher did not try to change the culture of the trade unions; she took action to make them less powerful. The equivalent today would involve breaking up Barclays to ensure that the "customer comes last" approach of the investment bankers never again seeps into the retail banking division. That would be a real culture change, and other banks would quickly get the message.