As Barclays announces a big fall in profits and a revamp of its business, Channel 4 News looks at what went wrong at the bank and asks if the future will be any brighter.
After making a staggering £6bn in 2011, Barclays profits plunged to £246m last year.
The bank was the author of its own misfortune: almost £2.5bn had to be set aside to compensate people mis-sold payment protection insurance (PPI) and businesses mis-sold interest rate swaps.
Then there was the £290m fine for attempting to manipulate the Libor inter-bank lending rate.
Barclays is not unique in engaging in these errant practices – only last week, RBS was fined almost £400m for Libor manipulation – but it is facing further questions over how it raised money in the Middle East during the 2008 banking crisis.
Four current and former employees are currently being investigated by the Financial Services Authority and the Serious Fraud Office.
When Channel 4 News asked new Barclays Chief Executive Antony Jenkins about the affair today, he said he could not comment on an “ongoing investigation”.
But talking more broadly about the bank’s practices in previous years, he emphasised that they had changed.
“I think we have learned the lessons of the past at Barclays,” he said. “We have in my view been too aggressive, too short-term focused and too self-serving.
“For my own accountability in that, I take full responsibility. What is really important now is to fix the problems, as we will do, and build a better Barclays going forward.”
In many ways, Mr Jenkins is the personification of the change Barclays is keen to trumpet, even though he was the boss of Barclaycard when PPI was being mis-sold.
His great strength is that he is not his predecessor Bob Diamond, who resigned from Barclays after the Libor scandal broke. But restoring the bank’s reputation will take several years; there is no quick fix.
“My view is, to embed deep cultural change in Barclays will take a period of about five years,” he said.
So what will Barclays do differently in future, apart from behave itself?
The structured capital markets unit, responsible for tax planning/tax avoidance, will close.
Investment banking, synonymous with the Diamond years, will continue to play a big part in the Barclays empire, but it will shrink from where it is today.
“We still expect to have a sizeable investment bank at Barclays, but we also expect that over time the proportion of investment banking will reduce and retail banking and other types of banking, like cards and payment, will increase.”
Mr Jenkins described investment banking as an “entirely legitimate business that can be done in the appropriate way”.
Bonuses will continue to be paid, but will also shrink.
The bank said today that despite a huge fall in profits, it will make total bonus payments of £1.85bn to staff, compared with £2.2bn last year.
The average payout will be £13,000, with £54,000 for investment banking staff.
Mr Jenkins said that while he understood there was public concern about bonuses, Barclays had to pay the going rate.
“What we need to do is pay competitively and we need to pay for performance. We have committed that over time we will bring down the amount of money that we pay in bonuses in relation to our income or profits and we will do that.
“But if we don’t pay money at all to our colleagues in those industries, then we wouldn’t have a business and we wouldn’t be doing the right thing for our shareholders.”
The question is whether Barclays is doing enough to change perceptions.
Andre Spicer, professor or organisational behaviour at Cass Business School in London, told Channel 4 News: “It is a reasonable first step, but can they deal with the potential hypocrisies?
“The CEO being partially responsible for a division accused of mis-selling PPIs, the continuing reliance on investment banking and bonuses.”
Professor Spicer said the appointment of Mr Jenkins in August was a sign that Barclays was changing from “an American-style risk-taking investment bank to a British, gentlemanly high street bank”.
Closing the structured capital markets unit was another sign that excess was coming to an end.
“They’re saying to investors that they’re not going to get the 20 per cent returns they’ve seen in the past, that they’re going to become a safer, more risk averse bank in the future.”