Barclays and RBS set for ‘moral overhaul’ in 2013

By DOMINIC JEFF
Published on 24/12/2012 00:00

BARCLAYS and Royal Bank of Scotland (RBS) are planning charm offensives for 2013 as they seek to rescue their tattered reputations following scandals over high pay and interest-rate rigging.

Barclays says it is looking to cut pay and link bonuses to “social impact” rather than profits, while RBS will launch a campaign to make staff “obsessive” about customers’ needs and put the “outside world” at the centre of the bank’s strategy.

Hector Sants, the former head of the Financial Services Authority, hasalready been hired by Barclays to oversee compliance and regulatoryrelations.

Sants will also help overhaul pay policy at the bank as part of a strategic review next year.

However, Sants himself will reportedly earn £3 million when he starts at the bank in January.

Barclays is thought to be considering slashing salaries at its investment division by as much as 50 per cent.

Rather than being based entirely on financial goals, bonus payments will be partly linked to the “social impact” of transactions made. Known as Project Transform, the process will allow new chief executive Antony Jenkins to show a leaf has been turned after the perceived excesses of his investment banking predecessor Bob Diamond.

Diamond, who had already been under fire over his own and some of his co-workers’ high pay, resigned after Barclays was fined £290m in June when it became the first bank brought to book for fixing the inter-bank lending rate, Libor.

Since then, more banks have been drawn into the Libor-fixing scandal. Swiss giant UBS was fined £940m by regulators last week, and RBS is expected to settle early next year.

RBS chief executive Stephen Hester told a Sunday newspaper that he is preparing a “moral overhaul” of the state-backed lender, calling on staff to place the customer and the wider world at the centre of everything they do.

“If we succeed looking outside, we will succeed looking inside,” said Hester, who gave up his £1m bonus this year under political pressure.

“We exist to serve customers well and everybody at RBS has to be obsessive about that.”

Hester, who took over from disgraced boss Fred Goodwin following RBS’s collapse and subsequent taxpayer bailout, was challenged on the subject of the company’s use to society by the incoming Archbishop of Canterbury, Justin Welby, at a hearing in the UK parliament recently.