Among Bob Diamond’s citizenship themes is resolving the ‘too big to fail’ issue, taking the taxpayer off the hook for any future bank catastrophe. This is laudable
Bob Diamond, the chief executive of Barclays, knew he was facing a sceptical audience when he set “citizenship” as one of the his four priorities on taking the helm last year.
“We’re not doing this as something that is ‘this year’s initiative’,” he said after his invitation-only citizenship day event on Wednesday. “Judge us years from now – on the quality of our business, on our relationship with shareholders, our reputation. Most importantly, are we a better business and better citizens?”
To be fair, Barclays is not the only bank with reputational issues. The entire industry has been tarred with the same brush after the 2008 crisis. Any attempt to improve its image should be given a chance.
The audience did not allow the bank to duck the controversy about pay – Diamond’s £17m earnings helped provoke one of the early rebellions during the shareholder spring – nor the embarrassing run-in with the tax authorities at the start of the year when the Treasury took the unusual step of introducing retrospective legislation to close down two tax avoidance schemes.
But neither were there any concrete answers as to how Barclays would tackle the issues that seem to be at the heart of its battle to prove its “citizenship”.
Publishing a three-year plan, Barclays set out a three-pronged definition of how it defines citizenship: contributing to growth; the way it does business; and supporting the communities in which its operates.
“We recognise that we have a long way to go on our journey to restore trust and deliver our citizenship agenda,” the bank said in the 14-page document published on Wednesday.
There is now a formal subcommittee on the board tasked with overseeing citizenship, which involves pledges to provide £150bn of lending over the next three years, to raise £2tn of financing for businesses and to lend £50bn to small businesses.
And among Diamond’s citizenship themes is resolving the “too big to fail” issue, taking the taxpayer off the hook for any future bank catastrophe. This is laudable. Taxpayers cannot afford another bailout after the £65bn pumped into Royal Bank of Scotland and Lloyds Banking Group and the nationalisation of Northern Rock and parts of Bradford & Bingley.
It also serves a purpose for Barclays: proving that banks no longer need a bailout might, just might, mean that mega-bonuses become less egregious to the taxpaying public – and push the “citizenship” agenda on to the back burner.