The cost of cleaning up Barclays' public image has already taken a significant slice out of the bank's first-quarter profits.
Pre-tax profits fell by a quarter during the first three months of the year, to £1.8 billion, as the bank pressed ahead with ‘Project Transform’, a measure designed to revolutionise the bank’s culture and restore its damaged public image.
Chief executive Antony Jenkins has pledged to scale down the scandal-struck investment bank following its involvement in mis-selling activity and the attempted manipulation of the Libor inter-bank lending rate.
He has also attempted to move the bank away from its profit-dominated culture of old towards a model based upon values such as integrity and respect.
Several reports commissioned in recent months have highlighted the bank’s relentless pursuit of “revenue at all costs” alongside a culture of fear and intimidation that plagued Barclays’ Wealth Division under the reign of previous chief executive Bob Diamond.
The cost of the clean-up is estimated to reach £1 billion this year, with over £500 million already allocated to restructuring costs which include severance packages for thousands of staff at the investment bank.
The bank recently announced the departure of investment chiefs Rich Ricci and Tom Kalaris, the most senior of Diamond’s remaining lieutenants, who will leave the bank this summer with a year’s salary in addition to their deferred share options (read more).
However, the investment bank proved a strong earner for Barclays, reporting an 11% increase in revenue from the same period last year, at £1.3 billion. The investment bank accounts for roughly three quarters of Barclays’ total profits.
Keith McDonald
Which4U Editor
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