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27 Salz Review An Independent Review of Barclays’ Business Practices UBS have since been announced. Nevertheless, the announcement of Barclays’ settlement resulted first in the resignation of Marcus Agius, and then led to the resignations of Bob Diamond and Jerry del Missier. 3.24 Many of the people to whom we spoke over the course of the Review saw the erosion of public support for banks as an industry-wide problem. However, the LIBOR settlement put Barclays in the spotlight and some of the issues we have considered are specific to Barclays and not industry issues. The extreme public and political reactions that followed LIBOR have presented Barclays with an opportunity to confront the change required to make a sustainable difference. 3.25 We welcome the programme upon which Antony Jenkins has embarked. The challenge for Barclays – as indeed for many other banks – is how to embed the positive changes internally which will take time, while convincing a sceptical public impatient to see tangible progress. It will also be difficult to persuade the public of change while a number of historical regulatory and legal issues are still being dealt with.
Salz Review An Independent Review of Barclays’ Business Practices 28 4. Barclays’ Evolution 4.1 Barclays today is the second largest UK bank 29 and is classified by the Financial Stability Board as one of the 28 banks around the world which are so large that they are systemically important globally. 30 As we interviewed Barclays’ current and former management and directors, we were struck by the number of references to the history of the bank and how, as Barclays grew away from its family origins, it failed to develop a strong culture that could have avoided some unacceptable business practices. In this section we outline how the bank has evolved, and its considerable growth in recent years. Early Years 4.2 Barclays’ roots lie in retail banking in London. Founded as goldsmith bankers in 1690 by John Freame, a Quaker, and Thomas Gould, it is said to have initially attracted deposits because of the Quaker reputation for integrity. In 1728, the bank moved into Lombard Street in the heart of the City of London where its head office remained and the sign of the ‘black eagle’ could be seen until the move to Canary Wharf in 2005. In 1736 James Barclay, the son-in-law of John Freame, became a partner. 4.3 In 1896, Barclays grew significantly through the amalgamation of 20 regional banks and became a joint stock bank under the single name. The combined bank listed on the London Stock Exchange in 1902, and by 1925 had become one of the UK’s five largest banks. 4.4 Between 1925 and 1986, Barclays expanded in the UK and overseas – most notably through mergers with the National Bank of South Africa and the Colonial and Anglo-Egyptian Banks. In 1966 it launched Barclaycard, the UK’s first credit card, and in 1985, followed Midland Bank in abolishing transaction charges, unless overdrawn, for retail customers (‘free-if-in-credit banking’). In 1986, Barclays announced that it would sell its investment in South Africa following antiapartheid protests. 4.5 As a bank originally dominated by family interests, Barclays had developed a culture in its early years that was described to us as reflecting its non-conformist origins, but also somewhat based on patronage rather than being meritocratic. However, it was a bank where people knew how and where decisions were made and on what basis – whether these were described as family values or simply how things had always been done. Most of the power resided in the regions. As the bank grew and the external environment changed, the family-based culture was eroded and something of a vacuum seems to have developed, with individual businesses developing their own ways of doing things. This transition may account for the lack of clearly defined and consistently communicated values. 29 Measured by assets. 30 Financial Stability Board, Update of Group of Global Systemically Important Banks, 1 November 2012.
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Salz Review - April 2013
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Salz Review - Wall Street Journal

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