It’s difficult to know which was the more remarkable precedent set at the Banking Standards Committee on Tuesday morning: that which came at the beginning or at the end.
At the beginning of the session featuring Barclays’ CEO Antony Jenkins and chairman Sir David Walker, the latter agreed – contrary to most of the banking industry – that powers should be in place that would allow banks to be broken up.
This was in reference to George Osborne’s new Banking Reform Bill, which has been roundly criticised by the British Bankers Association as a disastrous “step too far”.
But at the end of the near three hour session, proceedings had turned somewhat frosty as the subject repeatedly turned towards pay.
For committee chairman Andrew Tyrie, the pair’s impressive demonstration of Barclays’ reformed culture was severely compromised by Walker’s undying support for remuneration chairman Sir John Sunderland.
Last week, Sunderland told the committee that, even in retrospect, he had made no mistake in the pay recommendations for staff, including disgraced former chief executive Bob Diamond.
The bank is currently laying aside extra funds to account for the numerous scandals, including the mis-selling of PPI insurance and interest-rate hedging products, that occurred under Diamond’s leadership.
To Tyrie, the committee could not have confidence in the integrity of the reform taking place at Barclays while such an example of the old culture remained. He went as far as to recommend a replacement before dismissing a clearly riled Walker’s plea for trust.
Tyrie: Don’t you see now that given what seemed to be such clear past misjudgements, that the time has come to set your remuneration strategy in a new framework led by a new rem-co chairman?
Walker: I’m not concerned about what he did in the past. I find it extraordinary that in this forum it should be supposed that even if people make mistakes they were not mistakes that they could learn from…
Tyrie: You’ve just said that you should take advantage of people who have learnt from their mistakes. The problem we have with his evidence is that he told us bluntly and explicitly that he didn’t think he had made a mistake. Even in retrospect.
Walker: I am concerned with the present…
Tyrie: We don’t seem to be getting very far in thinking through how we can have confidence that the non-executives in Barclays can be carrying the right culture. We don’t doubt the good intentions of the two people in front of us. What we want is some more concrete evidence…
Walker: Chairman, I have nothing to say beyond inviting you to trust my judgment.
Tyrie: It is our job to suspend that judgement.
It is rare that a week passes without a major story involving Barclays. As Andrew Tyrie bluntly observes, the bank seems to have a finger in every scandal-ridden pie.
But it’s difficult not to find sympathy for Antony Jenkins, a competent and unassuming man rather unfairly swept up in the blanket anger and distrust now levelled at the overpaid and overprotected banking industry.
It is somewhat amusing that Jenkins is still widely referred to as the ‘new’ chief executive, five months after his appointment. He carries such a low media profile compared to his brash predecessor that he seems to blend unobtrusively into the background. The Times this week described Jenkins as ‘dull’; it’s an alarming precursor of our age if that has to be negative.
We often hear the word ‘talent’ branded about bankers – disconcerting for how unquantifiable and unwarranted it always seems. But Jenkins’ record of achievement at Barclays shows impressive acumen.
After masterminding a change in fortunes for Barclaycard, seeking to advance credit card technology and to maintain market-leading 0% deals for customers, he set about downsizing and streamlining the global retail bank following years of prior overspending and profligacy.
Jenkins does not look like a radical, but he has had to convincingly appear as one. In five months as chief executive, he has redefined the bank’s pay structure, successfully investigated the disappearance of a damning report, implemented a new code of ethics, and seen off some of Diamond’s cronies.
His preemptive announcement that he would reject a £1m bonus proved sensible and savvy. Harmful speculation that lingered over RBS chief Stephen Hester last year over bonuses led the bank’s chairman to confess that “we failed to anticipate the scale of the public reaction to the issue.”
This year, it’s the turn of Lloyds’ boss Antonio Horta-Osorio to avoid making any commitments about bonuses. Given the public exposure of the bank’s hard-selling salespoints system, he’s treading similarly thin ice.
Jenkins’ 5-month legacy
- Changed Barclays’ pay structure to reward customer service instead of sales (read more).
- Investigated a missing document that was heavily critical of Barclays Wealth (read more).
- Established a new code of ethics, demanding that all 140,000 staff agree or resign (read more).
- Sees off finance chief Christopher Lucas and group counsel Mark Harding.
- Pre-emptively dismisses any prospect of a bonus (read more).
The obvious obstruction to the overhaul is Bob Diamond’s close allies still at the Wealth division. But Jenkins knows that these can be marginalised, and the bank claims that reforms from the recovered Genesis report are being put into place.
It would seem that the ‘new’ chief executive is establishing a firm grip on the bank’s slippery slope – for the moment at least. The task now is not to let go.