Barclays' little story and how it changed banking culture

Top City boys queue up, two by two, for a grilling.

This week has seen top City boys queuing up, two-by-two, as the Parliamentary Commission on Banking Standards (PCBS) called them in for a grilling on UK banking standards, rate-rigging scandals and big fat cheques.

In the firing line this morning was Anthony Jenkins and Sir David Walker, Barclay’s group chief executive and chairman, after Lloyds’ on Monday.

During an intense three-hour inquiry, Jenkins told the committee he was “shredding” the legacy left by his former boss Bob Diamond, after (quite publicly) rebuffing a £2.75m bonus having decided it would be “wrong” to receive a cheque too fully-loaded.

It is still far too early to see whether there has been any material change in Barclays’ culture. Rome wasn’t built, or-re-built in a day, and the jury will still be left with a few big questions over the British bank’s cultural DNA after today’s session.

Diamond on his part had received a £2.7m annual bonus for 2011, a pay check of £17m (with the bank paying also his £5.7 tax bill) after resigning amid the interest rate rigging scandal.

The boss was known to lead an "aggressive" and "self-serving" culture in the bank, the committee heard, while hush-hush talks in the City from former Barclays’ people push it a bit further, describing it as “rotten”.

The multimillion-bounty led to the forced resignation of Alison Carnwath, former chairman of the Barclays remuneration committee, who claimed to have been the lone voice for Diamond receiving "zero" bonus.

Along with Walker, Jenkins announced, avoided –and confessed- a few things.

The Committee jumped at the chance to enquire about The Bonus, remuneration and more specifically Sir John Sunderland, the man in control of it –he who replaces Mrs Carnwath.

“The problem we have with [Sunderland’s] evidence is that he didn’t think he had made a mistake (in regards to Bob Diamond's pay off), even in retrospect?” the committee asked.

“You'll have to trust my judgement,” replied Walker, in what looked more and more like a battledome.

Walker and Jenkins informed the MPs of a bonus slim down at Barclays following yet another £1bn provision to cover compensation for interest rate swap products and mis-selling of payment protection insurance (PPI).

According to Barclays, the scandal-hit year is now costing the bank around £2.6bn in compensation: PPI damages will go to borrowers who were (mis-)sold loan insurances (to protect them if they missed repayments due to illness or redundancy), but were not actually eligible to claim it.

During the tense discussion, Jenkins let out that he would step down if there was a regulatory failing under his watch.

This comment seemed too trouble-free for the Committee not to pick upon: Jenkins was head of Barclaycard from 2006, and throughout the time PPI products were sold.

“We worked hard to modify PPI products and we didn't get it right completely” was what Jenkins had to answer. He added: “it's a question of proportionality.”

This answer baffled the Committee; but not as much as when he spoke about the LIBOR-fixing –which cost the bank $450m in fines. “I first learnt about Libor on the day the Libor fine was announced,” he said.

When the committee asked him if he questioned the banking culture while working closely with Diamond, Jenkins took the time before calmly answering, “Yes.”

What he meant by this assent, was that he had been arguing “for a change in culture since 2012.”

Rumours were sparked by Committee chairman Andrew Tyrie when he said it was possible the Barclays bosses would be called in before the Committee again.

But next in line for the grilling are JP Morgan and HSBC’s heads, who will give the Committee more to query until their new report is published.

Photograph: Getty Images

Elsa Buchanan writes for VRL Financial News

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Cabinet audit: what does the appointment of Andrea Leadsom as Environment Secretary mean for policy?

The political and policy-based implications of the new Secretary of State for Environment, Food and Rural Affairs.

A little over a week into Andrea Leadsom’s new role as Secretary of State for Environment, Food and Rural Affairs (Defra), and senior industry figures are already questioning her credentials. A growing list of campaigners have called for her resignation, and even the Cabinet Office implied that her department's responsibilities will be downgraded.

So far, so bad.

The appointment would appear to be something of a consolation prize, coming just days after Leadsom pulled out of the Conservative leadership race and allowed Theresa May to enter No 10 unopposed.

Yet while Leadsom may have been able to twist the truth on her CV in the City, no amount of tampering will improve the agriculture-related side to her record: one barely exists. In fact, recent statements made on the subject have only added to her reputation for vacuous opinion: “It would make so much more sense if those with the big fields do the sheep, and those with the hill farms do the butterflies,” she told an audience assembled for a referendum debate. No matter the livelihoods of thousands of the UK’s hilltop sheep farmers, then? No need for butterflies outside of national parks?

Normally such a lack of experience is unsurprising. The department has gained a reputation as something of a ministerial backwater; a useful place to send problematic colleagues for some sobering time-out.

But these are not normal times.

As Brexit negotiations unfold, Defra will be central to establishing new, domestic policies for UK food and farming; sectors worth around £108bn to the economy and responsible for employing one in eight of the population.

In this context, Leadsom’s appointment seems, at best, a misguided attempt to make the architects of Brexit either live up to their promises or be seen to fail in the attempt.

At worst, May might actually think she is a good fit for the job. Leadsom’s one, water-tight credential – her commitment to opposing restraints on industry – certainly has its upsides for a Prime Minister in need of an alternative to the EU’s Common Agricultural Policy (CAP); a policy responsible for around 40 per cent the entire EU budget.

Why not leave such a daunting task in the hands of someone with an instinct for “abolishing” subsidies  thus freeing up money to spend elsewhere?

As with most things to do with the EU, CAP has some major cons and some equally compelling pros. Take the fact that 80 per cent of CAP aid is paid out to the richest 25 per cent of farmers (most of whom are either landed gentry or vast, industrialised, mega-farmers). But then offset this against the provision of vital lifelines for some of the UK’s most conscientious, local and insecure of food producers.

The NFU told the New Statesman that there are many issues in need of urgent attention; from an improved Basic Payment Scheme, to guarantees for agri-environment funding, and a commitment to the 25-year TB eradication strategy. But that they also hope, above all, “that Mrs Leadsom will champion British food and farming. Our industry has a great story to tell”.

The construction of a new domestic agricultural policy is a once-in-a-generation opportunity for Britain to truly decide where its priorities for food and environment lie, as well as to which kind of farmers (as well as which countries) it wants to delegate their delivery.

In the context of so much uncertainty and such great opportunity, Leadsom has a tough job ahead of her. And no amount of “speaking as a mother” will change that.

India Bourke is the New Statesman's editorial assistant.