Barclays boss admits errors over whistleblower and says 'I got too personally involved' - as it happened

Nick Fletcher

from on 2017-04-10 13:20 (#2JKKA)

Also:

Bank of England in spotlight over libor rigging claims

2.20pm BST

Here's a roundup of the day's events involving the Barclays whistleblower:

Regulators are investigating the bank and its chief executive Jes Staley after he attempted to unmask a whistleblower who had written anonymous letters expressing concerns about a senior executive.

1.20pm BST

Reuters Breaking Views columnist Dominic Elliott says Jes Staley's actions may seem morally defensible since he wanted to defend a colleague from what he saw as unfounded smears, but the situation calls Barclays' internal procedures into question. Elliott concludes:

Given Staley should have known the rules, it reflects badly on him. It also looks bad for Barclays: the incident only came to light as a result of a separate complaint about the bank's whistleblowing regime this year. That suggests more profound failings. A board-instigated review of the related procedures feels like too little, too late.

12.47pm BST

More reaction to the Barclays whistleblowing:

12.39pm BST

Barclays boss Jes Staley has just sent an email out to all staff defending his actions. While apologising and saying he would co-operate with the investigation he said he acted because he believed the whistleblower's actions were intended to maliciously smear the executive involved.

But he admitted he had got "too personally involved" adding: "My hope was that if we found out who was sending these letters we could try and get them to stop the harassment of a person who did not deserve that treatment."

12.26pm BST

More reaction to the whistleblowing news. Laith Khalaf, senior analyst at Hargreaves Lansdown, said:

Incidents like this do nothing to convince the public that banking misdemeanours are in the rear-view mirror, and this is undoubtedly an embarrassment, not to mention a distraction, for Barclays and its CEO.

Barclays has actually been doing quite well under Jes Staley's leadership, so this error is a blemish in what was starting to look like a promising tenure. Shareholders will be doubly disappointed that the bank is once again in trouble with regulators, and that the man at the top of the organisation is responsible for it.

12.22pm BST

The person Barclays boss Jes Staley was trying to protect because he thought the anonymous letters "were an unfair personal attack on the senior employee" has been named as Tim Main.

Main joined Barclays in June 2016 to be chairman of the investment bank's financial institutions group, based in New York. He joined Barclays from Evercore but had previously spent 20 years at JP Morgan.

11.54am BST

Barclays appointed non-executive director Mike Ashley (not the Sports Direct founder!) as whistleblower's champion in 2016, and in the bank's most recent annual report he had this to say:

11.40am BST

Here's a quote in an internal memo to Barclays staff from Jes Staley when he was named as the new chief executive in 2015:

There can be no retreat from becoming a values-driven organisation which conducts itself with integrity at all times.

Jes has impeccable character and integrity.

11.18am BST

Jes Staley's attempts to track down a whistleblower are "clearly disappointing" and the action from regulators should be a wake-up call to company boards. Oliver Parry, the IoD's head of corporate governance tells my colleague Julia Kollewe:

Protection for whistle-blowers is vital if employees are to feel confident in reporting problems, so it is clearly disappointing that Barclays has conceded its CEO breached the rules. The bank has admitted its error, and it is right that the CEO has had his pay cut to show the seriousness of the issue.

Barclays is absolutely correct to review its processes to make sure this doesn't happen again, and shareholders will want further clarity at the upcoming annual meeting. The UK has a reputation for high standards of corporate governance, but boards only work when all directors are aware of their roles and responsibilities.

11.04am BST

John Mann, the Labour MP and member of the Treasury Committee, is not impressed. He said if the regulators were indeed probing Barclays over the attempts to identify the whistleblower, the bank's chief executive Jes Staley "has to resign".

10.58am BST

Here's some reaction to the Barclays situation. Economist Shaun Richards writes:

I would imagine that pretty much everyone reading this is aware of modern whistleblowing procedures so it seems strange that the CEO of Barclays was not. Actually even when he was told he had another go a month later.

There is a clear example of "back to the future" when we note that rather than being sacked we move into Yes Prime Minister land as he will receive one of the "strongly worded letters" so beloved of the apochryphal civil servant Sir Humphrey Appleby! We are told there will be this too "a very significant compensation adjustment will be made to Mr Staley's variable compensation award." But as it is "variable" how will we know?

If whistleblowing is going to form any real part of corporate governance going forwards, regulators need to throw the book at Jes Staley.

Having been given a copy of the first letter [received in June 2016] and made aware of the second, Mr Staley initially requested that the Group Information Security (GIS) team attempt to identify the authors of the letters. Mr Staley considered that the letters were an unfair personal attack on the senior employee.

Mr Staley was subsequently informed that it was not appropriate to take steps to identify the authors. Following this, neither Mr Staley nor the GIS team took any such further action.

10.16am BST

Back with the latest Libor reports and the Bank of England has issued the response it made to the BBC's Panorama programme:

Libor and other global benchmarks were not regulated in the UK or elsewhere during the period in question. Nonetheless, the Bank of England has been assisting the SFO's criminal investigations into Libor manipulation by employees at commercial banks and brokers by providing, on a voluntary basis, documents and records requested by the SFO.

The Bank is committed to publishing materials relating to the SFO's investigations into benchmark manipulation when it is appropriate to do so.

10.13am BST

Here's our report on the attempt by Barclays boss Jes Staley to track down a whistleblower:

10.07am BST

Barclays has refused to comment on whether the US Department of Financial Services is also investigating.

9.58am BST

Here's what The Barclays Way - its code of conduct - has to say on the subject of employees raising concerns:

Sometimes the actions of a few may put our reputation at stake. If you believe something is not right - like misconduct, fraud or illegal activity - or if you feel that our standards aren't being met, it is really important that you speak up. Any concerns you may have can be raised in confidence by:

" Discussing the matter with your manager, or manager's manager

9.26am BST

Barclays is not only facing an investigation into chief executive Jes Staley's attempts to unmask a whistleblower from UK regulators.

The Department of Financial Services in New York is also looking into the matter, according to Bloomberg.

9.17am BST

City trader Tom Hayes, the first person convicted of rigging Libor and serving an 11-year sentence, has issued a statement on the BBC story that the Bank of England put pressure on banks to lower their rates:

The involvement of the Bank of England in lowballing Libor was a key plank of my defence. The prosecution did not give me the evidence I needed to prove it and my jury were misled. It is my view that there should be an urgent public inquiry into the real Libor scandal: where central banks, politicians and the British Bankers' Association colluded to get artificially low Libor rates. Traders like me should not be in prison - we were only requesting Libor submissions that reflected market conditions. I have now been in a high security prison for over 18 months but I swear that I did not know that requesting Libor rates that benefitted my bank but which also reflected the market was wrong.

9.05am BST

So far this latest run-in with the regulators has not had much effect on Barclays share price. It is down just 0.2% at 214.85p.

Regulatory fatigue? Or do investors believe a severe reprimand for a FTSE 100 chief executive and a subsequent bonus cut - an event rare as hen's teeth - is nothing much to worry about? Or is everyone off on their Easter break?

8.53am BST

Barclays says that in the wake of its chief executive Jes Staley's attempts to track down the whistleblower "a very significant compensation adjustment will be made to Mr Staley's variable compensation award." My colleague Julia Kollewe has crunched the numbers:

Jes Staley received a total pay package of 4.2m last year including an annual bonus of 1.3m (60% of his maximum bonus opportunity for the year). For this year, he is in line for an annual bonus of up to 1.88m and another bonus under the long-term incentive plan of up to 2.82m, on top of his annual fixed pay, which amounted to 2.35m last year.

8.18am BST

The Bank of England may be relieved that Barclays' woes have taken some of the attention away from new claims it had interfered with the setting of libor rates - which tracks how much it costs banks to borrow from each other.

A BBC Panorama report claims a secret recording shows the Bank repeatedly put pressure on commercial banks to push their libor rates down during the 2008 financial crisis. The BBC story is here.

8.05am BST

This is a problem Barclays could have done without after its host of regulatory issues, but removing Staley from his post could set back its attempts to revive the business, says analyst Gary Greenwood at Shore Capital:

Given Barclays' history of regulatory misdemeanours, most notably the high profile investigation into Libor rigging which led to former CEO Bob Diamond's departure from the group, this latest revelation represents a very significant embarrassment for the Board as it tries to rebuild the group's reputation.

As for Mr Staley, it remains to be seen whether the PRA and FCA come to the same conclusion as the Board in allowing him to remain in his post, although we would assume that the sanctions proposed will have already been discussed with the regulators and should therefore help to mitigate this risk. It is possible that the group may also be fined by the regulators.

7.56am BST

Staley said:

I have apologised to the Barclays Board, and accepted its conclusion that my personal actions in this matter were errors on my part. I will also accept whatever sanction it deems appropriate. I will cooperate fully with the Financial Conduct Authority and the Prudential Regulatory Authority, which are now both examining this matter.

Our whistleblowing process is one of the most important means by which we protect our culture and values at Barclays and I certainly want to ensure that all colleagues, and others who may utilise it, understand the criticality which I attach to it.

7.55am BST

The whole thing started in June 2016 when the bank's board and a senior executive both received anonymous letters about a senior executive who had been recruited earlier in the year. Barclays said:

Amongst other issues, the letters raised concerns of a personal nature about the senior employee, Mr Staley's knowledge of and role in dealing with those issues at a previous employer, and the appropriateness of the recruitment process followed on this occasion by Barclays.

7.44am BST

Barclays says it will co-operate with the investigation by the regulators, and will also review its whistleblowing processes.

The banks' chairman John McFarlane, said:

I am personally very disappointed and apologetic that this situation has occurred, particularly as we strive to operate to the highest possible ethical standards. The Board takes Barclays culture and the integrity of its controls extremely seriously. We have investigated this matter fully using an external law firm and we will be commissioning an independent review of Barclays processes and controls to determine what improvements may be required.

7.41am BST

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

It's a quiet day on the economic and results front but not for the banking sector, albeit in a way which does it no favours.

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