Barclays slammed for failings and urged to be transparent
Source: Bloomberg News |
April 4, 2013, Thursday
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Print Edition
Print Edition
BARCLAYS Plc, the UK's second-largest bank by assets, paid investment bankers bonuses "incapable of justification" as employees focused on revenue at the expense of clients, an internal report said.
In the report commissioned by the bank after it was fined 290 million pounds (US$428 million) for manipulating Libor in June, Rothschild vice chairman Anthony Salz criticized the lender for failings in its culture and urged it to improve its openness and transparency.
In parts of the company, there was "a sense that senior management did not want to hear bad news," which "contributed to a reluctance to escalate issues of concern," according to the 236-page report published yesterday.
"Pay contributed significantly to a sense among a few that they were somehow unaffected by the ordinary rules," Salz wrote. "A few investment bankers seems to lose a sense of proportion and humility."
Antony Jenkins, 51, who replaced Robert Diamond as CEO last August, is seeking to rein in pay and boost profits to shareholders to help restore investor confidence in the wake of the Libor scandal. The London-based bank plans to eliminate some 3,700 jobs this year after posting an annual loss of 1.7 billion pounds.
"We concluded that the reputational problems for Barclays stem in part from the perception that, at least in the UK, some bankers have appeared oblivious to reality," the report said. "Despite billions of pounds of liquidity support from taxpayers, many senior bankers seemed still to be arguing that they deserved their pre-crisis levels of pay."
Barclays paid its top 70 executives "consistently and significantly above" the industry norm, the report said. Managing directors at Barclays's investment bank got base pay of 150,000 pounds to 300,000 pounds, as well as an average bonus of about 70 percent of their salary in 2012. Some senior employees received bonuses equivalent to more than double their base pay, it showed.
"They have singled out the top 70 managers for being paid too much," said Ian Gordon, an analyst at Investec Plc in London with a buy rating on the bank. "Most people would agree with that. The good news for Barclays shareholders is this doesn't appear to change anything."
The bank's consumer unit in October said it will stop awarding bonuses to employees based on sales.
In the report commissioned by the bank after it was fined 290 million pounds (US$428 million) for manipulating Libor in June, Rothschild vice chairman Anthony Salz criticized the lender for failings in its culture and urged it to improve its openness and transparency.
In parts of the company, there was "a sense that senior management did not want to hear bad news," which "contributed to a reluctance to escalate issues of concern," according to the 236-page report published yesterday.
"Pay contributed significantly to a sense among a few that they were somehow unaffected by the ordinary rules," Salz wrote. "A few investment bankers seems to lose a sense of proportion and humility."
Antony Jenkins, 51, who replaced Robert Diamond as CEO last August, is seeking to rein in pay and boost profits to shareholders to help restore investor confidence in the wake of the Libor scandal. The London-based bank plans to eliminate some 3,700 jobs this year after posting an annual loss of 1.7 billion pounds.
"We concluded that the reputational problems for Barclays stem in part from the perception that, at least in the UK, some bankers have appeared oblivious to reality," the report said. "Despite billions of pounds of liquidity support from taxpayers, many senior bankers seemed still to be arguing that they deserved their pre-crisis levels of pay."
Barclays paid its top 70 executives "consistently and significantly above" the industry norm, the report said. Managing directors at Barclays's investment bank got base pay of 150,000 pounds to 300,000 pounds, as well as an average bonus of about 70 percent of their salary in 2012. Some senior employees received bonuses equivalent to more than double their base pay, it showed.
"They have singled out the top 70 managers for being paid too much," said Ian Gordon, an analyst at Investec Plc in London with a buy rating on the bank. "Most people would agree with that. The good news for Barclays shareholders is this doesn't appear to change anything."
The bank's consumer unit in October said it will stop awarding bonuses to employees based on sales.
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