Barclays to take axe to its 'failures'
Chief executive Antony Jenkins to admit that the 'old ways weren't the right way to behave'
James Moore is the Independent's Associate Business Editor and writes the Outlook City comment column from Tuesday to Friday. He also has a keen interest in disability issues and when not attempting to further injure himself playing wheelchair basketball.
Sunday 10 February 2013
Barclays will this week announce the closure of its under-fire structured capital markets business, in what boss Antony Jenkins will claim is "a fundamental break from the past".
Mr Jenkins will shut down other chunks of the investment banking division, putting thousands of jobs under threat, but the SCM division is symbolic as it has been criticised for running a series of tax avoidance schemes.
"Going forward, such activity is incompatible with our purpose," Mr Jenkins, who has carried out a root-and-branch review of all the bank's 75 business lines, will say.
In a forthright presentation to convince investors and the public that "Barclays is changing", Mr Jenkins will admit "the old ways weren't the right way to behave nor did they deliver the right results – for banks themselves or for wider society."
At least 10 per cent of the business lines could go. Some sources suggested the number could be even higher. Mr Jenkins, who took over from Bob Diamond after the Libor rate-fixing scandal, has spent the past few days putting the finishing touches to his presentation.
Businesses facing the axe include some trading in "soft" commodities, so the bank will no longer profit from rising food prices.
A consultation with staff at the investment bank is already under way. Many more jobs are set to be outsourced to India. The bank has already told senior managers in its investment bank that they won't receive cash bonuses this year and will instead get deferred shares. Lesser lights are set to see their pay cut.
One source said: "There has been a culture that has grown up that has seen even, say, IT staff paid big money just because they work for the investment bank. That can't be allowed to continue."
The string of scandals that have involved Barclays include the widespread mis-selling of payment protection insurance and interest rate swap contracts. The investment bank was fined £290m over Libor.
Insiders have told the Independent on Sunday that there is a long way to go to reform what they describe as a culture of fear and intimidation in some parts of the investment bank.
One leading investor said shareholders would back Mr Jenkins: "Mr Diamond always used to show a graph of the 65 per of the business that was beating the cost equity but not the 35 per cent that didn't. He never seemed to get round to cutting those businesses, though."
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