News Column

Business analysis: Barclays: Will boss apply armchair lesson on calling bonus bluffs, asks Jill Treanor

April 29, 2014

Jill Treanor



At first glance the letter in the Financial Times looks like another rant about Barclays' pay policies. Barclays is an easy target after last week's acrimonious annual meeting at which investors large and small rounded on the bank following its decision to increase its bonus pot by 10% in a year when profits fell by 32% and shareholders were asked to back a pounds 5.8bn cash call.

But it is the signature at the end - Robert Pickering - that makes the latest attack more painful. Pickering used to run Cazenove, now JP Morgan Cazenove after a deal struck with the US investment bank. He takes umbrage at the use of the phrase "death spiral" by the Barclays boss Antony Jenkins to explain the need to pay out higher bonuses after the bank's investment bankers, particularly those in the US, threatened to leave.

Pickering writes about how he was "regularly held up at gunpoint" by colleagues demanding more to stop them leaving (usually for Goldman Sachs), and argues that investment bankers have an interest in perpetuating the myth of this so-called "death spiral".

"It is absolutely ingrained in the culture of these organisations and Mr Jenkins' antagonists at [the investment bank] in the US, having been schooled in the rough, tough world of Lehman Brothers, will be master exponents of the art form," he wrote.

Pickering provides his own anecdote about succumbing to the demands: "In the febrile days of 2000, my predecessor was told that the very survival of the 200-year-old firm was dependent on the continued employment of a 20-something individual who had been in the industry for about 18 months. We offered him a partnership but he left anyway. A few years later I reminded my senior management team of this incident and none of us, myself included, could remember his name."

His remedy? A tough and experienced manager who can face down the threats. Pickering - who left the banking industry in 2008, no doubt cushioned by a number of fat pay cheques - does not appear to think Jenkins can be described this way. He concludes: "It is possible that Mr Jenkins will prove his doubters wrong and come out on top, but from my armchair it looks like an unequal fight and my money would be on the investment bankers."

Pickering has penned a number of armchair letters to the FT, on subjects ranging from the Olympics to investment banks overcharging. His latest missive, though, strikes a popular chord. Jenkins, of course, will not need this reminder as only last week he was promising shareholders he would not do it again. The message was wait for the outcome of the investment banking strategy review on 8 May. We'll see how tough Jenkins can be then.



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Source: Guardian (UK)


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