Antony Jenkins is a refreshingly boring banker, but his appointment cannot draw a line under the bank’s troubles
It’s easy to see what the choice of a new head of Barclays is supposed to signal. Antony Jenkins is a refreshingly boring banker; a surprisingly welcome breath of muggy air after all the turbulence at the high-street institution long since captured by investment bankers.
A retail-banking veteran, Mr Jenkins’s background is in branches and Barclaycard, not mortgage derivatives and misreporting Libor. Where his predecessor, Master of the Universe Bob Diamond, last year took £17m from the bank in pay, shares and perks – not to mention £5.7m to cover his tax bill – Mr Jenkins will receive a comparatively modest £8.6m (provided he meets demanding targets – and that your comparison is solely with other millionaire bankers). Even while the charge sheet for Barclays is still growing – see this week’s revelation that it is now under investigation by the Serious Fraud Office – Mr Jenkins’ arrival is intended to draw a line under all the recent trouble, by indicating that a new retail broom will sweep away the work-hard-pay-hard investment-banking culture.
To which, all one can say is: nice try but no executive cigar. Barclays is probably Britain’s most troubled financial institution. The past year alone has seen it hit by the PPI mis-selling scandal, the revelation of force-feeding small businesses unsuitable and hugely costly financial products, the censure of the Treasury over corporate tax-dodging, the Libor scandal, and now an SFO investigation. Many of these cases are still snowballing; the news that Barclays and others fixed money market rates has prompted full-scale investigations by a phalanx of official bodies (including the FBI) and the threat of lawsuits from American cities, brokerages and investors. No number of nice guys will be able to fend off that lot. Conversely, blaming all this misbehaviour on the former boss, no matter how outsize his pay and personality, doesn’t wash. The big issue surely is the structure of Barclays.
The safe high-street bank Mr Jenkins came through is now welded onto a huge trading arm, Barclays Capital, which now has £1.8 trillion in gross credit risk – more than the UK’s annual GDP. Much of that risk has been reduced, but the bulk of it is in derivatives tied to Britain and Europe, which are the sickest parts of the world economy. In essence, Barclays has used its taxpayer backing to rack up a giant credit risk that could sink the entire country. By promoting a retail banker to front a giant trading operation, Barclays would like ministers and taxpayers to believe that it’s not so bad, or so risky. This is an unconvincing plea. Far better for the government to demand Barclays splits itself in two. Taxpayers should not be used to guarantee and subsidise a bank’s trading operation; nor should they be put on the hook for when it all goes wrong.