UK-headquartered Barclays has become "too complex to manage, with a culture that rewarded sales at the expense of clients", according to an internal report put together by Rothschild vice chairman, Anthony Salz.
In the report commissioned to Salz by Barclays after it was fined GBP290 million (US$428 million) for manipulating Libor in June 2012, the lender has been criticised for "failings in its culture" and has been urged to improve its openness and transparency.
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The Salz report says that Barclays "has struggled to deal with pay in a way that reflects a reasonable balance" between the interests of shareholders and those of executives and employees.
"We concluded that the reputational problems for Barclays stem in part from the perception that, at least in the UK, some bankers have appeared oblivious to reality," the report said.
Barclays’ investment banking arm paid out an average of GBP170 million a year between 2002 and 2009 under its long-term incentive scheme, on top of salary and annual bonuses.
While Barclays has recently announced changes to its bonus plans, the review raised concerns that its long-term schemes were still too complex.
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By GlobalDataFocusing pay on revenues encouraged misspelling of products such as the wrongly sold loans insurance, for which the bank set aside GBP2.6 billion in compensation, the report said.
It also said there were worries over bonuses for those in so-called control functions – such as risk management – and recommended increasing fixed pay instead to avoid conflicts of interest.
"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."
Antony Jenkins, who replaced Robert Diamond as CEO in August 2012, is seeking to rein in executive pay and give more of the bank’s profits to enable the restoration of investor confidence among shareholders.
Barclays plans to report back on the Salz Review before its annual general meeting on April 25.
