Salz Review - Wall Street Journal

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Salz Review
An Independent Review of Barclays’ Business Practices
Andrew Bailey, then Managing Director of the Prudential Business Unit of the FSA 165 ,
has suggested that “if … there is a fundamental breakdown in trust, then the boards of
these institutions have to recognise that trust has got to be got back and they have to
think very hard about how they do that.” 166 The level of expectation placed on bank
boards, particularly in terms of what can be accomplished by non-executive directors,
is extremely high – perhaps unrealistically so.
9.6 The Barclays Board has explicitly recognised the need for change. Antony Jenkins
announced the bank’s new purpose and values in January 2013, acknowledging that
“unless we operate to the highest standards and our stakeholders trust us to behave
with integrity, no business – and certainly no financial institution – can continue to
be successful”. 167
9.7 It will be unhelpful if the ever-increasing expectations of bank board governance –
driven by reviews, regulators, parliamentary enquiries and the media – deter those
with the competencies and experience from offering to join bank boards.
9.8 Given the systemic importance of major banks, attracting the strongest and best
qualified people to non-executive roles should be a concern to us all. Improving this
may well require a change in attitudes, from broad acceptance of the limitations and
realities of the non-executive role to improved collaboration between bank boards
and regulators. Bank boards need experts on the banks’ specialist banking activities
and they would also benefit from expertise in other important aspects of their
business such as technology and retailing. Proposals currently under consideration to
increase sanctions available against bank directors, over and above those generally
applicable to directors, may deter candidates who do not at the outset understand
specialist and complex banking areas and so find it difficult to assess the risks. 168
9.9 We have considered both the design and the effectiveness of governance at Barclays,
concentrating on those areas where, in our judgment, change may have a meaningful
impact on the Group’s future success in improving its business practices. In
reviewing the written records of Board meetings, we found it difficult to gauge the
extent of challenge and debate although minutes have provided a professional record
of the major issues and decisions. Our conclusions therefore have been influenced by
views expressed to us in interviews and may not necessarily represent the views of all
Board members.
165 As of 1 April 2013, Deputy Governor for Prudential Regulation at the Bank of England, and Chief
Executive of the Prudential Regulatory Authority.
166 Comments made on 28 June 2012, quoted widely in the press e.g.,
http://www.ft.com/cms/s/0/fb6e8350-c1e0-11e1-b76a-00144feabdc0.html.
167 Antony Jenkins, Email to Barclays staff, 17 January 2013 – widely quoted and reproduced in full in the
New York Times: http://dealbook.nytimes.com/2013/01/17/new-barclays-chief-tells-staff-acceptchanges-or-leave/.
168 “[T]he crisis highlighted the important role that individuals – especially bank directors – play in the key
decisions taken by banks – decisions which can have far-reaching consequences not just for the institution
concerned or its customers but for Government, taxpayers and the wider economy. This wider impact of
financial difficulties at banks makes them different from other companies and potentially justifies treating
the directors and senior management of banks differently from those in other types of companies.” HM
Treasury, Sanctions for the Directors of Failed Banks, July 2012.