Barclays PLC (NYSE:BCS) (LON:BARC), in its quest to become a global financial giant from being just a retail bank, has put profits over the interest of the customers, according to a 244 page report, which cost £17m and was concluded after conducting 600 individual interviews.
The review was ordered by the bank’s top management in the aftermath of the Libor rigging scandal last year. The report highlighted that the Bank adopted the strategy of “at all costs,” which mainly affected the investment banking division of the bank. The report also criticized the management style of former chief executive John Varley. The top 70 executives of the bank received the remuneration 35 percent, more than the employees of the same level at other banks
The strategy adopted by former chief executive of Barclays PLC (NYSE:BCS) (LON:BARC), Robert E. Diamond has been criticized in the report. Diamond is seen as the man behind taking up the bank as the world’s largest investment banks.
Diamond had to resign from his post after the Libor rigging scandal last year. Prior to being appointed as CEO of the Bank, Diamond led the Bank’s investment banking operations.
The bank’s lust to increase its earnings resulted in its risky behavior, which also raised questions about the bank’s overall reputation. Barclays PLC (NYSE:BCS) (LON:BARC) was the first amongst the banks to admit its involvement in the Libor rigging scandal. The bank paid $450 million in order to settle with American and British Authorities.
The bank has also been accused of selling the complex financial and insurance product to small businesses and retail customers, which cost whole British Banking sector to shell out billions of dollars in compensation.
The independent review was ordered by the bank’s top management in July, to examine the events that thrashed the image of the bank. The investigation continued for 8 long months, and 600 Barclays PLC (NYSE:BCS) (LON:BARC) employees were interviewed along with the Industry stakeholders.
According to the report, the bank has done every thing to survive the financial crisis without the government help; however, in the course it’s over leveraging attitude went beyond the hands of the board.
The report, which was overseen by Anthony Salz, former head of the law firm Freshfields Bruckhaus Deringer, said that the Bank focused more on revenue generation, which is evident from its track record of 10 years rather than serving the interest of customers and clients.
To overcome the anomalies, Salz suggested 34 recommendations, which call for closer cooperation with regulators and tapping on members who have more expertise in banking. The chief executive should build a “cohesive senior executive team” and such environment should be build where the lower level gets to convey their issues to senior level.