Inside Track: Jenkins should settle Barclays’ £50m fine so he can move on
RAISE £6bn from investors and hand more than half of it back to employees and investors six months later: as a formula for managing a corporate balance sheet, there’s a certain novelty in Barclays’ approach.
But for someone who has choreographed efforts to rehabilitate a company’s image as carefully as Antony Jenkins, this has been a painful week.
Sunday’s exposure of customer data theft at Barclays was damaging enough but at least that could hardly be laid at the door of the bank’s chief executive.
The same could not be said for the messages reverberating through Tuesday’s annual results statement.
The heralded investment bank, “competing from Singapore to San Francisco”, in Jenkins’ words, is struggling to pull its weight under any metric.
Transform, his turnaround plan, has imposed short-term costs with uncertain long-term gains.
Then there is the insipid performance of the UK retail bank, which should at least start to improve when interest rates finally start to rise.
I don’t doubt the sincerity of Jenkins and his chairman, Sir David Walker, or their determination to drive through the kind of cultural change that Barclays requires.
Two further obstacles stand in their way. Firstly, compensation costs are heading in the wrong direction: whatever his protestations, £2.4bn in incentive awards for 2013 versus £2.2bn last time was as myopic as reputational decisions come.
In that context, giving up his own bonus of about £1.5m was the easy option for Jenkins; the much harder task would have been to convince colleagues of the need for restraint, but it looks like a challenge that he ducked rather feebly.
In any normal year, that might be excusable. But after promising a step-change in Barclays’ approach to pay, it beggars belief that anyone in the boardroom could have sanctioned this approach.
The second hurdle is equally significant. Cast your mind back to last summer and the disclosure that Barclays was contesting a £50m fine from the Financial Conduct Authority (FCA) over its rescue fundraising from Qatar in 2008. Insiders say the issue might not get resolved for two years or more: in the tenure of most FTSE-100 chief executives, that’s an eternity.
My advice? For such a comparatively paltry sum, Mr Jenkins should swallow hard and settle, particularly if it is possible to do so without compromising the bank in other legal or regulatory probes.
Looking across the Atlantic might help. Jamie Dimon, who heads JP Morgan Chase, coughed up $13bn (£7.8bn) last autumn for the sake of putting a swathe of legal problems behind it. Barclays won’t truly be able to move on until it has done the same.
Once that’s out of the way, Jenkins, who with the right tailwinds might become a successful corporate leader, might even start deserving the bonuses he keeps turning down.
RIO TINTO EYES MOZAMBIQUE SALE
It may not garner much coverage in today’s results statement, but Rio Tinto looks poised to sever ties with the coal operation that cost its last chief executive his job.
I understand that Sam Walsh has asked senior managers to report back imminently with proposals for Rio’s Mozambique assets, which it acquired as Riversdale Mining three years ago. A subsequent $3bn writedown convinced the company’s board to sack Tom Albanese. Now, Walsh has asked UBS to find a buyer, but I understand that it’s with such a lack of optimism about a successful outcome that a plan to close or run down the business is also being drawn up.
Mark Kleinman is the City editor of Sky News @MarkKleinmanSky