GUEST COMMENT: Frankly, Barclays' investment bankers are fed up with CEO speeches about social value
Bob Diamond is now just a dim and distant memory at Barclays. Desperate to restore the bank’s image, new CEO Anthony Jenkins is signalling a complete sea change away from the culture of ‘greed and excess’ which has tarred Barclays and other banks in recent years.
In Jenkins’ words, banks must now become “socially useful.” Rather than simply maximising profits, they must focus on how they can help their customers and the wider economy. Jenkins' use of waffle has become so excessive that someone has written an entire article about it.
Clearing out the cobwebs
As a former Barclays Capital employee listening to Jenkins I can’t help but feel that I’ve heard it all the hot air about social value before.
The fact is that when Bob Diamond became CEO just under two years ago, he was the new broom promising a thorough spring clean of the bank. Just like the present incumbent he wanted to usher in a new era of caring-sharing-banking spearheaded by the bank’s commitment to Project Merlin and their Citizenship Agenda.
In retrospect this all turned to be an elaborate window dressing exercise. Management’s recalcitrance in the fact of the public outcry over Libor fixing suggested Barclays had not actually learnt from its mistakes. To give senior management their dues they did make decent headway with one part of Project Merlin - fulfilling their commitments to issue more loans to UK small businesses. However lending only increased from a very low post-credit crunch base and naturally Barclays focused on cherry-picking the most creditworthy businesses.
The cynical citizenship agenda
If Project Merlin actually had some positive outcomes, the same can’t be said for Barclays’ ‘citizenship agenda.’
From my perspective, this was entirely free from merit and merely a cynical piece of PR designed to convince the public, shareholders and the more gullible Barclay’s employees that the bank was more interested in corporate social responsibility than in rewarding a handful of employees with stratospheric bonuses.
As a relatively junior employee at the time I remember that we were strongly encouraged to participate in a range of volunteering opportunities. These involved working in local schools and communities, the purpose being to demonstrate that investment bankers weren’t all champagne-swilling wide boys and that in fact we were responsible citizens.
Whilst this voluntary work was admirable, Bob’s constant crowing on about the bank’s commitment to citizenship to anyone who would listen became increasingly tiresome. This was especially so when those at the top of the Barclay’s investment banking food chain continued to enjoy big bonuses.
All in all, nothing changed during Bob’s reign and the message he sent back to his investment bankers was that he was still one of them and was going to fight their corner.
Learning from your mistakes
Any change at Barclays is going to be hard. Its biggest asset and also its biggest liability is the investment banking arm formally called Barclays Capital. Despite the heavy collateral damage to the brand caused by recent events, this remains a huge profit generator and until very recently Bob’s acolytes dominated the board.
If Jenkins wants to affect real reforms, he will face stiff opposition from his investment bankers - particularly on the issue of remuneration. Today it was suggested that Barclays wants to reduce its investment banking compensation ratio to 35%, necessitating a wholesale reappraisal of investment banking pay. Barclays is already said to be cutting salaries for senior staff by 30-50%.
Jenkins is in a hard place. He needs to make some tough changes. Ultimately, however, his investment bankers will respect him far more if he simply gets on with and stops spouting politically correct nothings.
