Barclays' Salz Review blames bank culture

image captionBarclays' rapid expansion before the financial crisis caused cultural problems, the review said

A report into Barclays bank has blamed "cultural shortcomings" at the bank for problems that led to the Libor-rigging scandal last year.

The Salz Review said the bank needed a "transformational change" to restore its reputation among the public.

The review, commissioned by Barclays, said the bank had become too focused on profit and bonuses rather than the interests of customers.

Barclays chairman, Sir David Walker, said it made "uncomfortable reading".

Corporate lawyer-turned-investment banker Anthony Salz was asked to carry out the review after the bank was fined a total of £290m by UK and US regulators for attempting to rig the key Libor interest rate between 2005 and 2009.

The review said Barclays' rapid expansion in the years leading up to the financial crisis produced "cultural challenges" at the bank.

"The result of this growth was that Barclays became complex to manage, tending to develop silos with different values and cultures," it said.

'Drive to win'

"We believe that the business practices for which Barclays has rightly been criticised were shaped predominantly by its cultures, which rested on uncertain foundations. There was no sense of common purpose in a group that had grown and diversified significantly in less than two decades."

The result, the report said, was a "strong drive to win", particularly as the bank became increasingly dominated by the investment banking business, which possessed a strong culture of winning.

This meant there was an "over-emphasis" on short-term financial performance, reinforced by a bonus and pay culture that rewarded money-making over serving the interests of customers and clients.

The report also said there was a sense that senior management did not want to hear bad news, and that the employees should instead solve problems on their own.

Transform agenda

"The Board asked for an insightful, rigorous, and, crucially, independent view of how Barclays could improve... [and] that is precisely what we have received," Barclays chairman Sir David Walker said, reacting to its publication.

"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."

Sir David took over as chairman last year after both the former chairman Marcus Agius and chief executive Bob Diamond resigned in the wake of the Libor scandal.

Barclays launched its Transform programme earlier this year to try to reform its business and practices.

Overseen by the new chief executive, Antony Jenkins, Barclays said that programme was already "substantially aligned" with the Salz Review's recommendations.

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