Chris Blackhurst: By buying the line that investment bankers rule the world and must be paid accordingly, Barclays may well become the 'Go From' bank
Midweek View: The Go To bank? Go to for what? A queue? Empty seats behind the glass? A machine that doesn't work?
Oh dear. On my way to work yesterday morning, I was listening to Antony Jenkins on the Today programme – and groaning.
Fortunately, tootling along in my little Fiat 500, there was no one else present to hear me. Jenkins was awful. I lost count of how many times he repeated robotically that Barclays (which he insisted on pronouncing ever so sl-ow-ly, as the bank's senior execs sometimes like to, as "Bar-clays") is to be the "Go To" bank.
Go To for what, exactly? A queue? Empty seats behind the glass? A machine that does not work? A stupor-inducing dull blue decor? Refusal of a loan? The slapping on of more charges? An automated phone answering service?
There was something cultish about Jenkins' delivery. Try as I might, I could not shake off an image of him leading his colleagues in prayer, chanting "Bar-clays is the Go-To bank, Bar-clays is the Go-To bank", over and over.
He talked about his "transform" programme, which appears to consist of little more than promoting more women into senior roles, and carrying out a YouGov poll as to how much Barclays customers trust their bank.
The pièce de resistance, however, was the admission that staff at Barclays' investment banking arm saw their pay rise 13 per cent when profits at their division fell 37 per cent. My foot jerked off the accelerator, causing the car to lurch forward.
To think that only a week ago, I was singing Jenkins' praises. And not just me – countless others. Then, the Barclays chief executive had announced he would be waiving his bonus. At last, I declared, we had a banking boss who understood the zeitgeist – while his rivals filled their boots, he was in touch with the public mood. We appeared to have turned, finally, some sort of corner.
But no. Jenkins has decreed that employees are to be paid more, even though their bit of the bank did worse. The reason, apparently, is that: "We employ people from Singapore to San Francisco, we compete in global markets for talent. And if we're acting in the best interests of our shareholders, we have to make sure we have the best people in the firm."
I know, I know. So good is this "talent" that their contribution to the bank's performance plummeted 37 per cent. As for the claim to be "acting in the best interests of our shareholders", what about the observation from the Institute of Directors, no less, that it "cannot be right in any business for the executive bonus pool to be nearly three times bigger than the total dividend payout to the company's owners"? It prompted the IoD to ask: "For whom is this institution being run?"
Later in the day, Barclays responded to City analysts' questions on a conference call. Any idea that this audience, more than any other, would get it – that they would understand why the investment bankers had to have pay rises – was quickly scotched. Even this lot gave the "Go To" chief a hard time. One of their key points concerned the proportion of profits awarded to staff. Barclays failed to provide a convincing answer.
My suspicion is that Jenkins is desperate to placate the investment bankers.
Rewind to 2012 and he came in on a ticket of making enormous change; from now on, Barclays was going to be the good bank, one where ethical standards were high. That was taken as a dig at the investment bankers with their risky, casino, high-stakes mindsets.
Roll forward and what do we find? That far from taking an axe to them and their remuneration packages, Jenkins is keeling over and going out of his way to be kind. Why? Because he found that the investment bank is a law unto itself – that, within Barclays, it does and says as it pleases. Built up by his predecessor, Bob Diamond, Barclays Capital, or BarCap as it was then known, was a separate fiefdom.
Responsible for transporting Barclays from sleepy old UK high-street bank to global powerhouse to rank alongside the big boys of Wall Street, Bob's kingdom could write its own ticket. Jenkins has realised that he upsets it at his peril.
Sadly, he's fallen for the line, propagated by investment bankers everywhere these past few years, that theirs is an ultra-competitive global industry and so they must be paid the international rate. Don't do that and, apparently, they will be off – able to join the opposition at the drop of a hat.
But will they? It's the same claim made by Royal Bank of Scotland to justify its pay levels – that it must hang on to these stars who could defect, just like that, to the other side. Nobody has ever tested if that is the case. Where are all these gaping vacancies?
Their case is built on the premise, too, that they're indispensable. Really?
What's fascinating about this is that banks which are very good at telling individual and business customers how to manage their affairs are so hopeless at running their own. Imagine if a small business borrower said to them that "profits are down 37 per cent but I need to give my staff a 13 per cent pay increase". What do you think the bank would say?
In his call to analysts, Jenkins said that controlling costs was "key to the success of any bank in the next decade". He added: "It is clear that the cost base has to come down in investment banking."
So why wait? If he was determined to make Barclays the "Go To" bank then Jenkins would have been brave enough to strike out on his own, to make a bold statement. Instead he has proved himself lacking in courage. Worse, given the furore surrounding yesterday's announcement, he is in danger of making Barclays the "Go From" bank.
For news of the richer pay days for the investment bankers was accompanied by job cuts elsewhere in Barclays of 10,000 to 12,000, and unspecified branch closures. Jenkins is doing what too many British bank bosses have done in recent years: slash the soft high-street underbelly while annoying the little folk – the branch employees and the ordinary customers. In so doing, he will doubtless have been influenced by the continued rise of internet banking.
The fact that it wasn't the branch network but the investment banking arm that nearly brought the bank to its knees, resulting in a bailout by Middle Eastern investors that is now the subject of a Serious Fraud Office investigation, is conveniently forgotten. Likewise, it was not the branches that were rigging Libor or the foreign exchange rates. It's a safe bet that when the next major embarrassment surfaces, it won't involve the branches and the high-street customers.
On its website, Barclays carries a plea for recruits: "Now is a great time to join Barclays as we continue on our journey to define the industry and become the 'Go To' bank." In behaving in the manner it has, Barclays has defined the industry all right. But not in the way it intended.
As for Go To, can we please stop this nonsense. Now.
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