Bottom Line: Antony Jenkins’ plans are being undermined for no good reason

Antony Jenkins must wonder if it is really worth all the effort – despite everything he has done to rehabilitate Barclays’ image after last year’s disasters, the authorities have still found ways to keep investors worried.

 

The chief took over after the former chairman, chief executive and chief operating officer all quit in the wake of the Libor scandal with a mission to clean up the bank and return it to a safe, sustainable, profit-making position.

 

He got off to a storming start with a review of every unit, an in-your-face push to show he cared by positioning huge signs with words like “Respect” across the foyer of the bank’s Canary Wharf HQ, and speeches on morality in the sector.

 

On the day of his appointment Jenkins told Morning Wire Barclays’ reputation would recover if it pushed harder and faster than the regulators required, implementing new rules years ahead of legal deadlines and showing it could work as a clean and secure lender. 

 

Investors loved it, the bank’s consumer approval ratings recovered and Barclays seemed on track to become a model bank.

 

But it turns out Jenkins’ view barely matters – the regulator is in charge now.

 

The latest storm started at the end of last year when the Bank of England declared banks may be underestimating their capital levels by up to £50bn, but offered little explanation to reassure markets.

 

Months of speculation followed, ending in the authorities telling RBS, Lloyds, Barclays, Nationwide and the Co-op Bank to find £27bn more in capital. It did not matter that the capital calculations used at the time by each bank had been approved by the regulator, or that each – bar Co-op – had solid plans in place to ramp up capital levels years ahead of official timetables. 

 

Each was given a different set of orders by the Bank of England to meet its own new timetable, with little explanation why, and to meet politicians’ goals of increasing  lending at all costs.

 

The result is banks have far less freedom to determine their own strategies than investors and bosses previously thought, and that can not be good for diversity, creativity or sustainability in the sector.