* Investment bank leaders ambiguous about right and
* Did not want to hear bad news
* Bank put profit before customers
* Bank seen as "too clever by half"
* "Report makes uncomfortable reading"-Barclays chairman
By Matt Scuffham
LONDON, April 3 Barclays needs to rein
in pay for top staff and tighten control of its operations to
repair its reputation after a string of scandals, a report
commissioned by the lender said on Wednesday.
In what Britain's second largest bank described as
"uncomfortable reading", the review said the group's rapid
transformation from domestic retail lender to global universal
bank created a sprawling set of businesses with their own
culture and an emphasis on profit, sometimes at all costs.
Investment banking leaders were ambiguous about right and
wrong, the report said.
"There was a very short-term focus on profit which led to a
problem with culture and values," Anthony Salz, a veteran lawyer
who wrote the 236-page report at Barclays's invitation, told
"It appeared to emphasise financial performance rather than
looking after customers. That was reinforced by the pay
"If Barclays is to achieve a material improvement in its
reputation, it will need to continue to make changes to its top
levels of pay so as to reflect talent and contribution more
realistically, and in ways that mean something to the general
The rock 'n' roll style rewards earned by top investment
bankers at Barclays prompted an outcry among austerity-weary
Britons last year after the bank was fined $450 million for its
role in manipulating global benchmark interest rates.
Barclays hired Salz, who is vice-chairman of investment bank
Rothschild, to review its culture and business practices after
the rate rigging scandal.
His report, which cost the bank nearly 15 million pounds,
made 34 recommendations with improvements in pay looming large,
including a greater link to long-term performance.
While Barclays has cut overall remuneration levels,
compensation for the top 70 executives was consistently above
the average at other banks, the report said. Barclays paid some
428 employees one million pounds or more last year.
Since the report was commissioned, Barclays has appointed
former retail banker Antony Jenkins as chief executive to
overhaul its culture and focus.
Salz said the bank's long term incentive programmes, which
have resulted in maximum payouts of on average eight times
salary for senior investment bankers, remained overly complex.
Barclays, which is reviewing the plans, said it would report
back on how it intends to implement the recommendations before
its annual shareholders' meeting on April 25
Jenkins has promised profound changes in behaviour and
culture but acknowledged it will take five to ten years to
achieve them. In January, he told staff they should leave if
they do not want to sign up to the new standards.
A BIT TOO CLEVER
Salz's report goes into forensic detail about Barclays'
failures, from breaches of U.S. sanctions and the mis-selling of
insurance products and hedging products to the rate rigging
scandal and its defensive attitude to customer complaints.
"The report makes for uncomfortable reading in parts,"
Barclays Chairman David Walker said in a statement.
Walker's predecessor Marcus Agius and then CEO Bob Diamond
left the bank last year in the wake of the interest rate rigging
Diamond, a former Wall Street trader, built up Barclays'
investment bank from "edgy underdog" to global player in less
than a decade, paying a premium to attract talent from more
The report said that top management at the investment bank
inspired loyalty but they did not like hearing bad news.
"This all combined to create an environment in which leaders
were rarely effectively tested or challenged, contributing to a
sense of ambiguity about what was considered right and wrong,"
the report said.
When the financial crisis broke, Barclays' relationship with
regulators became tense.
"They were seen to become somewhat aggressive and a bit too
clever by half and that led to less than ideal relationships
including with the UK regulator," said Salz.