An internal review into Barclays has attacked the significantly higher pay of its most senior executives after identifying an elite ‘group of 70’ within the bank.
The independent review, led by former BBC director-general Anthony Salz and published today, was commissioned in July 2012 in the wake of the Libor rigging scandal when Barclays’ reputation was hammered by £290m worth of global fines.
The report makes 34 recommendations to improve Barclays’ culture, standards and practices. The review said Barclays’ staff pay reflected the industry average until it moved into the ‘group of 70’ or most senior and highly paid executives.
It says: “Compensation for the ‘group of 70’ was consistently and significantly above the median compared to peer banks. For example, in 2010 average pay to these executives was overall 35 per cent more than the market benchmark for their positions.”
Salz recommends the bank’s long-term award structure should be “simpler and transparent” while bonuses should be linked to controlling risk as well as profits.
On Libor rigging the report blamed cultural deficiencies on the trading floor, ineffective supervision and profit-driven targets and bonuses that ignored legal or ethical issues.
It also investigated the sale of payment protection insurance at the bank and blamed “aggressively pushed sales”. One example in 2009 noted a sales person would earn two and a half times more commission for selling a loan with PPI compared to a loan without PPI.
It says: “The culture of the bank had developed into one which at times valued meeting financial targets more than meeting customer needs.”
Barclays chairman Sir David Walker says: “The report makes for uncomfortable reading in parts. That is bound to be the case when one asks for an independent examination of this kind, and we must learn from the findings.”