[ by Howard Haykin ]

Barclays CEO Antony Jenkins, successor to Robert Diamond, said on Friday that he would not accept a bonus as the British bank struggles to rebuild its reputation after a series of recent scandals.  The announcement comes as British regulators investigate new allegations of improprieties by the bank. 

At issue is whether Barclays was required to disclose to shareholders, but failed to properly fulfill that obligation, namely:  the fact that the bank issued a loan to a group of Qatari investors that had given the British bank a cash infusion during the financial crisis - that, according to a person with direct knowledge of the matter, who spoke on the condition of anonymity. 

Last year, the bank disclosed that British and American authorities were investigating the legality of the payments related to a $7.1 billion cash injection to Qatar Holding, the sovereign wealth fund.  Mr. Jenkins and his management team are dealing with a spate of legal headaches.  A spokesperson for Barclays declined to comment about the investigation into potential wrongdoing connected to the loan to Qatari investors.

[C-I Note:  Who would have thought that Barclays could be such a 'sinkhole' - affecting everything that, and everyone who, come in contact with it.  The list of legal troubles appears to be never-ending.]

Previous Matters.    We're all aware that, prior to June 2012, Barclays agreed to pay a $452 million settlement with U.S. regulator, the CFTC, and with British regulator, the FSA, over Libor interest rate manipulation.  The case forced a number of the bank's top executives to resign, including then-CEO Bob Diamond Jr.   Barclays further faces these other regulatory matters:

• A $3.2 billion reserve that Barclays set aside to cover legal costs related to the bank's inappropriate sales of insurance to consumers.
• British authorities advised bank officials that a review will have to be conducted on the sale of certain interest-rate hedging products, after it was found that 90% of a sample of complex instruments were found to have been sold improperly.  Analysts say the investigation may lead to millions of dollars of new legal costs.

Bonus Give Up.   In light of the collective controversies surrounding the bank, Mr. Jenkins, whose annual salary is $1.7 million, said he did not want to be considered for a bonus that could have totaled up to $4.3 million.  Noting that many of the problems engulfing the bank were of its own making, Mr. Jenkins added:  "I think it only right that I bear an appropriate degree of accountability for those matters.  It would be wrong for me to receive a bonus for 2012."

By forgoing his bonus, Mr. Jenkins contrasts with his predecessor., Bob Diamond, who was in line for a $4.3 million bonus in deferred shares for 2011 despite criticism about his handling of the bank's performance.  Faced with mounting opposition, CEO Diamond and CFO Chris Lucas eventually agreed to receive only half of the 2011 deferred stock bonus - if the British bank failed to reach a number of its financial targets. 

Barclays, which will unveil a major overhaul of its operations when it reports earnings on 2/12/13, is expected to slash up to 2,000 jobs in its investment bank in an effort to reduce its exposure to risky trading activity, according to two people with direct knowledge of the matter.  As part of the changes, the British bank hired Hector Sants, the former head of the FSA, U.K.'s regulator, to serve as its new Chief Compliance Officer.

Mr. Jenkins, who previously ran Barclays' consumer banking business, told employees earlier this month that they should leave the bank if they were not willing to help rebuild the firm's reputation.  "My message to those people is simple:  Barclays is not the place for you. The rules have changed."
 

For further details, go to:  [ Dealbook, 2/1/13 ].