Barclays: Is Self-Recrimination the Way Forward?

Apr 5, 2013   //   by Keith McDonald   //   Commentary / Editorial  //  Comments Off on Barclays: Is Self-Recrimination the Way Forward?

Barclays Branch

It’s interesting to note that the latest condemning report on Barclays was commissioned and paid for by the bank itself. This looks to be a stark public relations advantage over the likes of HBOS, whose former bosses were targeted and condemned by the Banking Standards Commission.

Anthony Salz, City lawyer and vice president of Rothschild, penned the damning report on Barclays which criticised the “winning at all costs” mentality at the bank. He suggests that investment bankers considered themselves exempt from normal rules and lost all sense of proportion.

You would think we’re already well aware of this. The bank has dominated financial headlines over the last few months for all sorts of negative reasons, most of which date back to the profligate Bob Diamond era.

But Barclays is attempting to martyr itself somewhat – becoming complicit in the battering of its own reputation for past sins. Through this, it can differentiate the new regime from that ‘old’ culture which current boss Antony Jenkins hopes to dissolve.

It’s hardly straightforward, though, when there is opposition from within. The bank’s last attempt at self-recrimination prompted a great furore when it was discovered that a senior executive at Barclays Wealth, Andrew Tinney, had intercepted the report and shredded it. It was another embarrassing headline the bank didn’t need.

Becoming a glutton for punishment is, in a way, endemic of those values such as transparency that Jenkins wishes to instil throughout the bank.

It would be quite painful to watch if it wasn’t for the fact that, in the majority of cases, banks’ errant behaviour is still being uncovered with far less up-front co-operation.

Because so few have been held accountable for the systemic failures that led to high levels of toxic debt and subsequent banking collapses, it’s come as a shock that the Banking Standards Commission wants three former bosses at HBOS banned from further involvement in the City.

The report into the collapse of HBOS said that the bank would have collapsed even without the global financial crisis, such was the scale of mismanagement presided over by Sir James Crosby, Andy Hornby, and former chairman Lord Stevenson.

As it was, the bank incurred losses of £46 billion ahead of the rescue which cost the taxpayer £20.5 billion.

“The primary responsibility for the downfall of HBOS should rest with Sir James Crosby, architect of the strategy that set the course for disaster,” the report said.

Andy Hornby “proved unable or unwilling to change course” it said, while Lord Stevenson “presided over the bank’s board from its birth to its death.”

Financial Services Authority - Front

Part of the blame rested with the now-defunct Financial Services Authority, the Banking Standards Commission said, which was described as executing “thoroughly inadequate” supervision of the bank.

Regulatory failings meant that a number of opportunities were missed to prevent HBOS from pursuing the path that led to its own downfall.

The question is now, whether this proves the catalyst to pursue the failures of other former bosses at failed banks. If there are signs that this will happen, will these banks follow Barclays’ lead by organising the job themselves?

“Credit where credit’s due” – if that’s the kind of sentiment that Barclays is seeking – is still an uncomfortable litany when confidence in banks is so low. But it might well say in defence that something is better than nothing.

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