Financial News

  • 17 January 2013, 16:47

Exclusive: Barclays Boss Sets Out Values Plan

Barclays employees who do not wish to adhere to a strict new ethical code of conduct should quit the bank and find jobs elsewhere, its chief executive warned today as he began attempting to rebuild its tarnished reputation.

In a message sent this morning to Barclays' 140,000 staff around the world, Antony Jenkins said that Barclays had to become "a values-driven business" if it wanted to be "a valuable business" in future.

I have obtained a copy of the memo to employees, which outlines five core values by which staff should abide in the wake of the bank's involvement in a string of scandals. These are, according to Mr Jenkins, respect, integrity, service, excellence and stewardship.

He gave Barclays' workforce an ultimatum that this set of standards would be used to judge the performance of every employee.

"I have no doubt that the overwhelming majority of you, no matter in which area of the business or country you work, will enthusiastically support this move. But there might be some who don't feel they can fully buy in to an approach which so squarely links performance to the upholding of our values," he said.

"My message to those people is simple: Barclays is not the place for you. The rules have changed. You won't feel comfortable at Barclays and, to be frank, we won't feel comfortable with you as colleagues."

Today's memo is the most significant statement so far from Mr Jenkins about how he intends to run the bank.

While it contains few concrete details about Barclays' strategic direction, it is likely to be warmly welcomed by City investors who had become increasingly concerned about the cavalier bonus-led culture that was perceived to have evolved under his predecessor, Bob Diamond.

Mr Jenkins took over in August from Mr Diamond, who quit Barclays days after it was fined 290m by regulators in the UK and US for the role it played in manipulating the key interbank borrowing rate Libor.

He conceded that 2012 was a tough year for banks' image, saying that the industry over the course of two decades "had lost its way" and had become "too aggressive, too focused on the short term, too disconnected from the needs of our customers and clients, and wider society. We were not immune at Barclays from these mistakes."

Mr Jenkins said the bank's top executives had agreed "a single cross-business Purpose for Barclays... [which] is helping people achieve their ambitions - in the right way. Put simply this is the answer to the question 'What is Barclays for?' and it should guide our every action".

And he acknowledged that rebalancing Barclays' commitment to its various stakeholders was "vital to our future as an institution".

The new chief executive will flesh out more detail about his commercial priorities alongside Barclays' annual results on February 12.

In his message to staff, Mr Jenkins pledged to set out a blueprint for the bank "for at least the next decade" when he announces the results of the strategic review.

This morning's memo offers a clear hint that he will withdraw Barclays from areas of business, such as aggressive tax planning, where there is reputational risk to the bank.

Rich Ricci, the head of Barclays' investment banking arm, is undertaking a separate review which will contribute to Mr Jenkins' statement next month.

The comments of Barclays' new boss will be scrutinised across the banking sector and Westminster. Political critics of banks will recognise Mr Jenkins' description of Barclays' "tendency at times, manifest in all parts of the bank, to pursue short-term profits at the expense of the values and reputation of the organisation".

He said that this approach had "damaged our ability to make long-term sustainable returns" and he warned that "the notion that there must always be a choice between profits and a values-driven business is false".

"There is no choice between integrity and profit in this business, and to pose them as opposites fundamentally misunderstands the problems the banking sector faces," he wrote. "This is the difference between generating short-term profits and long-term shareholder value."

By setting out such a distinctive benchmark for the behaviour of Barclays' staff, Mr Jenkins is making a daring bet that he can transform the culture of one of the world's biggest banks. Like its peers, it has been caught up in the mis-selling of payment protection insurance and interest rate swaps, for which it has set aside approximately 2.5bn in potential compensation.

And it means that the Barclays boss will be under pressure to punish future transgressions by staff in a way that other bank chiefs may not feel obliged to.

Mr Jenkins said in the message that more than 1000 Barclays staff would be asked in the coming weeks to disseminate details of the new set of values across the bank's operations.

Mr Jenkins has already attempted to demonstrate his determination to repair Barclays' reputation by hiring Sir Hector Sants, former chief executive of the Financial Services Authority, to oversee compliance and government relations at the bank.

Under Mr Jenkins' brief stewardship, Barclays' share price has soared, although it remains a long way short of levels achieved before the onset of the 2008 banking crisis.

Mr Jenkins' attempt to define a new ethical code at Barclays pre-empts an independent review of the bank's culture and business practices being undertaken by the eminent City lawyer Anthony Salz.

Mr Salz was appointed by the Barclays board last summer following the Libor fines, and is expected to report in April, ahead of its annual meeting.

Shareholders will be seeking evidence that Mr Jenkins is putting his money where his mouth is by redressing the balance between distributions to investors and employees. Last year, Barclays paid about 1.2bn in staff bonuses but only 700m in dividends, a decision which angered leading shareholders.

Insiders yesterday dismissed suggestions that the bank had already decided on bonus payments for 2012, saying that Barclays' remuneration committee, headed by Sir John Sunderland, had yet to make formal proposals to the board.

"Performance assessment will be based not just on what we deliver but on how we deliver it. We must never again be in a position of rewarding people for making the bank money in a way which is unethical or inconsistent with our values," Mr Jenkins said today as he pledged to introduce the new approach during the coming year.

He said that 2013 would not be an easy year for Barclays but added: "If we combine the right values with the right strategy, we will build a more successful business, not just this year but in the years and decades that follow."

Barclays declined to comment on the message today.

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