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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Why isn't Labour putting forward Corbynite candidates?

Despite his successes as a candidate, the organisational victories have gone the way of Corbyn's opponents. 

The contest changes, but the result remains the same: Jeremy Corbyn’s preferred candidate defeated in a parliamentary selection. Afzhal Khan is Labour’s candidate in the Manchester Gorton by-election and the overwhelming favourite to be the seat’s next MP.

Although Khan, an MEP, was one of  the minority of Labour’s European MPs to dissent from a letter from the European parliamentary Labour party calling for Jeremy Corbyn to go in the summer of 2016, he backed Andy Burnham and Tom Watson in 2015, and it is widely believed, fairly or unfairly, that Khan had, as one local activist put it, “the brains to know which way the wind was blowing” rather than being a pukka Corbynite.

For the leader’s office, it was a double defeat;  their preferred candidate, Sam Wheeler, was kept off the longlist, when the party’s Corbynsceptics allied with the party’s BAME leadership to draw up an all ethnic minority shortlist, and Yasmine Dar, their back-up option, was narrowly defeated by Khan among members in Manchester Gorton.

But even when the leadership has got its preferred candidate to the contest, they have been defeated. That even happened in Copeland, where the shortlist was drawn up by Corbynites and designed to advantage Rachel Holliday, the leader’s office preferred candidate.

Why does the Labour left keep losing? Supporters combination of bad luck and bad decisions for the defeat.

In Oldham West, where Michael Meacher, a committed supporter of Jeremy Corbyn’s, was succeeded by Jim McMahon, who voted for Liz Kendall, McMahon was seen to be so far ahead that they had no credible chance of stopping him. Rosena Allin-Khan was a near-perfect candidate to hold the seat of Tooting: a doctor at the local hospital, the seat’s largest employer, with links to both the Polish and Pakistani communities that make up the seat’s biggest minority blocs.  Gillian Troughton, who won the Copeland selection, is a respected local councillor.

But the leadership has also made bad decisions, some claim.  The failure to get a candidate in Manchester Gorton was particularly egregious, as one trade unionist puts it: “We all knew that Gerald was not going to make it [until 2020], they had a local boy with good connections to the trade unions, that contest should have been theirs for the taking”. Instead, they lost control of the selection panel because Jeremy Corbyn missed an NEC meeting – the NEC is hung at present as the Corbynsceptics sacrificed their majority of one to retain the chair – and with it their best chance of taking the seat.

Others close to the leadership point out that for the first year of Corbyn’s leadership, the leader’s office was more preoccupied with the struggle for survival than it was with getting more of its people in. Decisions in by-elections were taken on the hop and often in a way that led to problems later down the line. It made sense to keep Mo Azam, from the party’s left, off the shortlist in Oldham West when Labour MPs were worried for their own seats and about the Ukip effect if Labour selected a minority candidate. But that enraged the party’s minority politicians and led directly to the all-ethnic-minority shortlist in Manchester Gorton.

They also point out that the party's councillor base, from where many candidates are drawn, is still largely Corbynsceptic, though they hope that this will change in the next round of local government selections. (Councillors must go through a reselection process at every election.)

But the biggest shift has very little to do with the Labour leadership. The big victories for the Labour left in internal battles under Ed Miliband were the result of Unite and the GMB working together. Now they are, for various reasons, at odds and the GMB has proven significantly better at working shortlists and campaigning for its members to become MPs.  That helps Corbynsceptics. “The reason why so many of the unions supported Jeremy the first time,” one senior Corbynite argues, “Is they wanted to move the Labour party a little bit to the left. They didn’t want a socialist transformation of the Labour party. And actually if you look at the people getting selected they are not Corbynites, but they are not Blairites either, and that’s what the unions wanted.”

Regardless of why, it means that, two years into Corbyn’s leadership, the Labour left finds itself smaller in parliament than it was at the beginning.  

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.