[ by Melanie Gretchen ]

Barclays Plc, the U.K.’s second-largest lender by assets, is unable to sell the bonuses paid to investment bankers amid internal accusations that employees focused on revenue at the expense of clients.  After the bank was fined £290 million ($428 million) for Libor manipulation in June, Rothschild vice chairman Anthony Salz's report commissioned by the bank found that a few employees believed themselves to be above the fray.

"Based on our interviews, we could not avoid concluding that pay contributed significantly to a sense among a few that they were somehow unaffected by the ordinary rules.  A few investment bankers seemed to lose a sense of proportion and humility."

Not a (Bob) Diamond in the Rough? Antony Jenkins, 51, assumed the role of CEO from Bob Diamond in August, vowing to rein in pay and boost profits to shareholders to help restore investor confidence following the Libor scandal.  Toward this end, the bank will eliminate some 3,700 jobs this year after posting an annual loss of £1.7 billion.

However, despite these efforts, essentially to downsize, it would seem the point hasn't hit home at Barclays, according to Mr. Salz.

"We concluded that the reputational problems for Barclays stem in part from the perception that, at least in the U.K., some bankers have appeared oblivious to reality.  Despite billions of pounds of liquidity support from taxpayers, many senior bankers seemed still to be arguing that they deserved their pre-crisis levels of pay."

Too Big to Rein In? On the contrary, the bank has continued to pay its top 70 executives "consistently and significantly above" the industry standard.  Managing directors at the firm's investment bank received a base of some £150,000 to £300,000 ($153,000 to $460,000), in addition to an average bonus of about 70% of their salary in 2012.  Some senior employees were rewarded with bonuses equivalent to more than double their base pay.

Going forward, the bank's consumer unit, headed up by Mr. Jenkins before being promoted to CEO, will stop awarding bonuses to employees based on sales and instead focus on customer satisfaction.  [C-I Note: It's the very least Barclays could do.]

"The report makes for uncomfortable reading in parts.  Our initial review of the report’s recommendations is that they are substantially aligned with work already progressing." -- David Walker, Barclays Chairman, in an e-mailed statement.

Understandably, Barclays hasn't attracted many allies in this matter.  Pensions & Investment Research Consultants Ltd., a corporate-governance adviser based in London, said in an e-mailed statement following Mr. Salz's report that "an obvious conclusion is that Barclays has become too big to understand."

For further details, go to [Bloomberg, 4/3/13].

To contact Melanie Gretchen: melanie@compliance-insights.com.