‘We get it,’ new Barclays chief says as he unveils major overhaul, job cuts

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Antony Jenkins is trying to do something some people might consider impossible: Bring integrity to Barclays PLC.

Since becoming chief executive officer of the bank last August, Mr. Jenkins has been desperate to distance it from Robert Diamond, the hard-charging American who left as CEO amid allegations the bank rigged the London interbank offered rate (Libor). Mr. Jenkins has given up his annual bonus, brought in new management, and told anyone who will listen that he is "shredding" the bank from Mr. Diamond.

On Tuesday Mr. Jenkins went further, unveiling a sweeping restructuring that will see executive pay cut, a controversial tax advice business close down and a new scorecard that will assess bank operations in part on how they affect Barclay's reputation. The result will be 3,700 job cuts and roughly $1-billion in lost revenue.

"There will be no going back to the old ways of doing things," Mr. Jenkins said in a speech announcing the changes. "We get it. We are changing the way we do business, we are changing the type of business we do and we are setting a new course for the future of Barclays."

Mr. Jenkins isn't the only banking executive trying to bring a change in corporate culture. On Monday, Stephen Hester, CEO of Royal Bank of Scotland, vowed to improve the culture at RBS as well. Mr. Hester told a British parliamentary committee that "it is legitimate for us to not just say narrow crookedness is all we need to fix, but to cast a broader net across the way the banking industry operated."

It's probably not surprising that Messrs. Jenkins and Hester would be leading the charge on reforming bank culture. Both banks have been at the centre of the Libor scandal, along with other banks, and have paid more than $500-million in fines. The banks also face allegations of wrongdoing on several other fronts including mis-selling a hedging product to hundreds of small businesses and misleading millions of customers about an insurance product. Barclays is also being investigated in the United States and Britain over fees it paid to Qatar's sovereign wealth fund in 2008 to secure a $5-billion investment and avoid a government bailout.

The scandals have been costly. Barclays announced a loss of $1.6-billion for 2012, compared with a profit of $5-billion a year earlier. The loss included $3-billion in special charges related to various financial penalties and pending settlements. Excluding the charges, Barclays had an operating profit of $11-billion, up 26 per cent from operating earnings of $8.8-billion in 2011.

Mr. Jenkins is vowing to do things differently and called his plan "Project Transform." All compliance officers across the bank will report to him directly and will operate separately from regional managers. He is also developing tax advice principles, saying the bank's tax planning division, set up by Mr. Diamond, will close because it went too far and was "incompatible" with the new mandate.

"I am totally committed to this," Mr. Jenkins said. Bankers hoping to ride out the downturn and then return to business as usual are wrong, he added. "This is a secular shift, it is permanent and material."

Mr. Hester and other RBS executives have said the change in culture at RBS, still 83 per cent owned by the British government, will come once the bank's troubled operations have been stabilized. John Hourican, an executive who resigned over the Libor scandal, said he implored his former colleagues at the bank to change the culture. "I have told people who are prepared to listen that they shouldn't waste my death," he told the committee.

It's not clear how successful either CEO will be. Many senior executives who were around for the Libor scandal remain in place and Barclays will still rely heavily on investment banking, where much of the trouble occurred.

"I wish Mr. Jenkins the best, but I fear his regime has a long way to go," said Louise Cooper, a London-based analyst with CooperCity. "Just like a Premier League football team, this was a bank run for the benefit of its top players."

Labour MP Pat McFadden, a member of the House of Commons treasury committee, added: "It's easy to shut down a unit, shift some people elsewhere and carry on with the behaviour. Barclays has a lot to prove with these things."