Antony Jenkins talks and acts sincerely about changing his bank – but there are some very familiar faces still on the board
When Andrew Bailey, the new banking regulator-in-chief, described Barclays as having a “culture of gaming, and gaming us“, his words rang too true. He was speaking during those frenetic days after Barclays had been hit with a £290m fine for rigging Libor – a record at the time, but since surpassed by UBS and RBS – when regulators, politicians and the public were in no mood to hold back on their views.
This was, after all, the bank that only months earlier had been revealed as the target of a move by the government to close down tax avoidance loopholes. This was the bank that had concocted a wheeze to take its most troublesome loans off its balance sheet and spin them into Protium, a Caymans-based venture that is now being closed down.
And then there was the infamous tax avoidance unit, known formally as Structured Capital Markets, rumoured to make a £1bn a year and hand out multimillion-pound deals to its smart but secretive players.
On top of this is the issue that hit consumers in their pockets – the mis-selling of payment protection insurance. And of course, there were the bonuses for Bob Diamond, the chief executive who was ousted in the wake of the Libor scandal, and his close lieutenants, which gave the impression that the bank was being run for its staff and not its shareholders.
So when Antony Jenkins, the upright Brit who replaced Diamond, announced to the world last week that SCM was to be disbanded, and the bank’s trading of food products with hedge funds brought to a halt, there was applause. “My overall message today is simple. Barclays is changing,” he promised. “There will be no going back to the old way of doing things. We get it. We are changing the way we do business, we are changing the type of business we do, and we are setting a new course for the future of Barclays.”
Rousing stuff. And to be fair, Jenkins sounds sincere, despite the management jargon he spouts. His strategy to reform Barclays has a name – Transform – which, painfully, means Turnaround, Return Acceptable Numbers and Sustain Forward Momentum. He has values, all laudable: respect, integrity, service, excellence and stewardship. Take a deep breath and try to overlook that many of those values could have been ripped out of any corporate manual – including one in particular: Barclays helped construct three companies for Enron, and was described in the official report into the energy company’s dramatic collapse as having “aided and abetted” in misleading auditors.
Jenkins sounds committed – and says that he is – but the problem he faces is that it’s easy to make his words sound hollow. The promise to eradicate “industrial-scale” tax avoidance – as Lord Lawson, the former chancellor, has so eloquently put it – grates when it’s quickly followed by the caveat that some of the tax services Barclays offers “are not controversial”. Indeed, Graham Wade, one of the key figures from the old SCM, is remaining at the bank. Jenkins will not say how many of the tax experts will leave and refuses to give any clues as to how much money the bank has made from tax avoidance schemes. Estimates of £1bn a year will therefore linger.
And then there is the issue of how long the legacy SCM schemes will keep generating profits – possibly for 10