Salz Review - Wall Street Journal

Salz Review
An Independent Review of Barclays’ Business Practices
86
Culture and Leadership by Business
8.32 There has been much speculation about the extent to which the investment bank
dominated, and influenced the culture and behaviours of the retail bank. Our analysis
concluded that, although there was some truth in this speculation, attempts to
influence the retail bank were generally resisted. Decentralisation, the lack of mobility
between the different businesses, as well as the launches of inconsistent values and
cultural initiatives in each of the different businesses, led to a sense of cultural
difference and cultural distance between the divisions rather than a sense of one
culture with one clear sense of purpose and one set of values. Nevertheless, it does
seem clear that some behaviours and values became increasingly common –
commercial performance at the expense of a more balanced perspective perhaps
being the most significant.
8.33 Although we did not find much evidence of the investment bank influencing the
culture of the rest of the Group, we did find some examples:
― Between 2005 and 2011, internal movements into the Group Centre
(Executive Committee and Group functions) predominantly comprised
leaders from the investment bank and wealth management;
― Because these leaders had been with the Group longer than many senior
leaders in the retail bank or Group functions, they typically seemed to have
more influence in decision making at Group level;
― There was a programme of re-assigning clients from the Corporate Bank to
the investment bank which (at least at the time) encouraged internal
competition about ownership of clients.
8.34 In any group, the role models are important. At Barclays, the compensation system,
promotions, and senior recruits all pointed in one direction. Financial contribution
was paramount. In both the retail bank and the investment bank, the success stories
were largely attached to strong personalities, successful sellers and revenue earners
and individuals who demonstrated cleverness and an ability to win. We now turn to
some of the individual business units.
Barclays Capital, the Corporate Bank, and Wealth
8.35 The investment bank grew fast over a relatively short period of time (indeed, until
2001, Barclays’ Business Bank generated more revenue than the investment bank).
The investment bank had a distinct, tightknit and consistent leadership team and
operated as a relatively independent business within Barclays. We identified three
(partly overlapping) phases with distinct characteristics: the ‘edgy underdog’ of the
early years (1999-2003), with a narrowly focused business model; the rapid organic
growth phase (2003 to 2007); and the financial crisis years (which included the 2008
acquisition of Lehman) to 2012 by which time it had become a leading global
investment bank. In just over a decade, the weight of Barclays’ business model has
moved from one based on relatively simple consumer products to one whose
revenue depends increasingly on far more complex investment banking.