Antony Jenkins may have tried to do the right thing at Barclays by waiving his own payout, but even the bonus-hungry City is shocked by the bankers' shameful behaviour
What a difference a year makes. Antony Jenkins was applauded by the City 12 months ago when he set out his strategy for turning Barclays into the "go to" bank by restricting costs and rooting out the bad apples in the investment banking arm.
Remember, it was barely six months after the Libor crisis had shaken Barclays to its core and forced out its top management, including Jenkins's predecessor, Bob Diamond. Jenkins had said enough to push the bank's share price up 9% by the end of the day.
Such was his status as the antithesis to Diamond – who was dubbed the "unacceptable face of banking" by Lord Mandelson – that Jenkins ended 2013 with the honour of guest editing the BBC's flagship Today programme. His halo was given a rub when Justin Welby, the archbishop of Canterbury, who also featured in the New Year's Eve radio show, supported Jenkins's attempt to clean up Barclays's act.
Last week the applause stopped. Even though Jenkins had personally tried to do the right thing by waiving his own bonus for 2013 – potentially as much as £2.7m – he stunned even the City with his failure to explain why the bank was paying out 10% more in bonuses in a year when profits collapsed by 32%. The boost was even harder to stomach in the investment bank, once better known as BarCap, where the bonus pot was up 13%, despite the unit reporting losses in the final quarter of the year.
So much for the pledge to change the culture of a bank which Sir Anthony Salz, the lawyer commissioned to review the organisation following the Libor scandal, had found employed bankers who "seemed to lose a sense of proportion and humility" as they chased enormous pay deals.
If he was hoping to make his audience understand why he was raising the pay of his key players, Jenkins really needed to drop the management-speak. But no, instead of saying "look, my best staff have walked and I can't afford to lose any more", he adopted the usual jargon. Barclays "had to compete in a global war for talent", he droned.
His answers pleased no one – not even the City, where bonuses are relished and accepted as the norm. The shares slid 4% on Tuesday, and by the end of the week had failed to regain their composure, losing 8% as investors scrambled to make sense of Jenkins's story. Erecting five huge glass blocks – one each for his buzzwords: respect, integrity, service, excellence and stewardship – in the cavernous atrium of Barclays's Canary Wharf headquarters has not proved enough to convince shareholders he means business.
And argue as he might that he was showing leadership by waiving his bonus, it didn't have the desired effect. The youthful new finance director, Tushar Morzaria, failed to follow his example – as did the other members of Jenkins's executive management team, after a year in which Barclays tapped shareholders for £5.8bn of fresh cash. Shame on them.
Shame, too, on the remuneration committee, led by City grandee Sir John Sunderland. Even without this pay debacle, Sunderland is already in a spot of local difficulty: under corporate governance etiquette he has now been on the board for too long – almost 10 years – to be deemed independent. He has a lot of explaining to do.
So too does Sir David Walker. Remember him? He is the big cheese who wrote the principles of good banking following the 2008 crisis, and was recruited by Barclays as chairman to stabilise the bank in the mayhem that followed the Libor fine.
He needs to do a lot of talking between now and the annual meeting of shareholders on 24 April if he is to convince the City – which after all loves bonuses – that it is worth throwing millions of pounds at investment bankers whose division is misfiring.
Salmond should try the Scottish krona
First it was left to Bank of England governor Mark Carney to state the obvious and point out that sharing the pound would force a newly independent Scotland to hand over some national sovereignty. Then last week George Osborne, Ed Balls and Danny Alexander followed up Carney's remarks by effectively taking currency-sharing off the table, where does it leave first minister, Alex Salmond?.
Of course the merest glance across the Channel is enough to show that nations sharing a currency need to closely co-ordinate their budgets and the riskier parts of their economies – their banks, for instance. So where does that leave first minister Alex Salmond? The knee-jerk reaction was a counter-threat: no pound means no debt-sharing. But there are plenty of other things Scotland would lose in a tit-for-tat negotiation that make a battle of words unappetising.
So maybe accepting the logic of two separate currencies would be a better route. The euro is off the table because Brussels will only accept a country that has managed its own currency for a few years, which appears to leave us with a Scottish dollar, punt, or Celtic krona.
Senior figures in the yes campaign are believed to be lobbying hard for a switch in tactics. The Daily Record reported that former SNP deputy leader Jim Sillars, Yes Scotland chairman Dennis Canavan and Scottish Green party co-convenor Patrick Harvie have all urged Mr Independence to adopt a separate currency. But Salmond wants to avoid opposition jibes that quitting the UK comes with huge risks. When Scots report that they will reject separation if it costs them even a small dip in their standard of living, a purely emotional plea to their sense of self is off the agenda.
Yet without a switch now to full independence with a new currency, Salmond faces the prospect of going into the election offering the electorate a messy negotiation with an unknown outcome. He can dismiss London's scaremongering all he likes, but given the logic of London's position he needs to stop talking about separation as if it is some form of Devo Max, and be realistic about becoming a confident new country.
Private equity calling?
The private equity market suffered a drubbing during the credit crunch as buyout firms reaped the consequences of acquiring assets such as EMI with too much debt. But talk of mega-deals is reviving, with the sector sitting on unused funds worth more than $1 trillion (£600bn).
This means that buyout talk will inevitably dwell upon listed businesses that are publicly struggling with strategic quandaries under the baleful eye of the shareholder community. Last week it was the turn of Morrisons to be the subject of takeover speculation as it battles with the question of whether it is undermining its value credentials by being pricier than Asda, and whether it should spend millions on an online service rather than cutting prices.
Outfits like Morrisons must ask whether a debt-laden buyout is the kind of breathing space they need. For many companies post-2008, such a move was disastrous. But struggling listed firms should be prepared for the private equity call.
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