'So, Mr Jenkins, are you 'shredding’ Bob Diamond’s legacy?”
The new boss of Barclays (LSE: BARC.L - news) only needed a nudge: “We should shred the behaviour of the past,” he told the Parliamentary Commission on Banking. “We should shred the times when we were too aggressive and too self-centred... we should shred those things... we’re shredding Bob Diamond’s legacy.”
You could almost picture the mild-mannered Jenkins, heaving the files of his indomitable predecessor, and ramming them into the paper shredder. Jenkins revealed he’d even canned Diamond’s pet project, the Citizenship campaign. “I told [Diamond] that actions were more important than words,” he said. Yet, as Jenkins proved during Tuesday’s session, genuinely transforming the culture at Barclays is easier said than done.
Just hours earlier, Barclays had announced another £1bn of provisions £600m for mis-selling PPI and £400m for mis-selling interest rates. Leaving aside the scale of these misdemeanours, critics also accused Barclays of choosing to “kitchen sink” the bad news just a week before results.
Banking Commission chairman Andrew Tyrie, clearly frustrated, said he had requested documents relating to the US investigation into Barclays.
He was unimpressed to find half of the information redacted. The bank’s chairman, Sir David Walker, had to agree to re-submit the paperwork.
Tyrie said he had also been unimpressed by Sir John Sunderland, chairman of Barclays’ remuneration committee, who was grilled earlier in the week. Sunderland was “unrepentant about past mistakes”, observed Tyrie, and uninterested in reducing salaries.
“Don’t you think the chairman of a remuneration committee ought to be thinking a little bit about how fixed pay is fixed?” asked Tyrie. Walker replied that he wasn’t up for “disinterring” the past, ignoring the fact that Sunderland is in charge of pay now.
The new Archbishop of Canterbury, Justin Welby, said he wasn’t “convinced” by claims the culture had changed. He asked if “remuneration drives the culture or culture drives remuneration?”. Jenkins replied that banking was naturally competitive.
Welby tried another direct question, this time on last week’s allegations that the Qatari cash injection in 2008 was funded by the bank itself. “Is there anything linked to [Qatar fundraising] that is going to cause further embarrassment and loss of trust?” he asked. “No comment,” said Walker.
Next (Other OTC: NXGPF - news) up, Labour MP Pat McFadden asked Jenkins why Barclays is fighting Guardian Care Homes “tooth and nail” over a case linked to Libor manipulation: “Doesn’t that court action indicate this talk of culture change, putting customer first, isn’t being matched by actions?”
Liberal Democrat Baroness Kramer pointedly observed that Jenkins was the boss when PPI mis-selling took place. Surely he should resign, too?
And so it went on, until it seemed Diamond’s legacy might be winning the battle with the shredder.
But, equally, it always seems that way in front of parliamentary committees. Amid the bluster, Jenkins and Walker did produce evidence of concrete reforms: the bonus pool will be reduced to pay for the mis-selling scandals; Barclays has a new conduct, reputation and risk committee; new non-executives are changing the face of the board, including the appointment on Tuesday of Diane de Saint Victor. In addition, Jenkins said the bank’s new ethical code was having a big impact: he is “materially changing” the structured capital markets business so it “will be consistent” with its new standards.
The shredder is on, but it will take time for its work to be complete.
= We must build on this returning confidence =
Forget the gym membership and the January detox. Britain, as a nation, seems to have signed up to a collective New Year’s resolution to be more optimistic.
Businesses and households have started the year with a spring in their step. Consumer confidence and house prices are up, companies claim to be hiring, business orders are at one-year highs, and corporate Britain is brimming with promise.
At least that’s the message from the past week of business and consumer surveys most notably Tuesday’s better-than-expected service sector PMIs. With the exception of the construction PMIs, the figures all promise sunny uplands. And the construction data may have been bad for a reason. Nobody builds in a snow storm, after all.
If there has been one vital missing ingredient in the dismal recovery to date, it has been confidence. Ephemeral as it is, confidence makes all the difference when a company has to choose between investing for the future or stashing its cash. If it can’t see a future, those notes go back under the mattress, where they do nothing for the economy.
“Things are not that bad, it just needs more confidence and more momentum into the system. You could either say the glass is half empty, or half full and we need to make it fuller,” said Paul Fisher, a Bank of England rate-setter, late last year.
For some reason, Britain has woken up to 2013 in distinctly “glass half full” mood. The test now will be whether that can be sustained, and whether confidence can be converted into action.
The Chancellor has made efforts to encourage business to get on and invest. For the next two years, companies can spend as much as £250,000 on new computers, machinery or laboratories and write the lot off against tax. According to Treasury estimates, it’s a giveaway of about £2bn to get the economy revving.
With wages expected gradually to catch up with inflation this year, even beleaguered retailers can glimpse some reason for hope once consumers find they have more disposable income. It’s a start, but the Chancellor could use the Budget next month to unveil more policies to convince households and business to turn confidence into growth.
The problem with confidence is that it is more easily lost than recovered. Confidence (BSE: ZCONFIDE.BO - news) appeared to be returning after last year’s Olympics euphoria and strong third-quarter growth. It was short-lived. This time, it’s more promising. The latest GDP data sparked fresh talk of a triple-dip recession, so confidence seems to be recovering despite the official figures, rather than because of them. It’s one New Year’s resolution worth keeping.