the times | Tuesday April 5 2022 41

Business

A quick note to the boss of accident-prone

Barclays: ‘Venkat, the honeymoon is over’

Patrick Hosking

“tripped over its own shoelaces”, was

Shore Capital’s way of putting it.

Whether the SEC sees it that way

remains to be seen. Buyers of these

notes have to consider counter-party

risk when investing. The more

outstanding notes issued, the greater

the risk of Barclays not being able to

honour all of them in the event of a

calamitous movement in markets.

They were plainly if inadvertently mis-

sold, and America is a litigious place.

It is a serious setback for CS

“Venkat” Venkatakrishnan, the new

chief executive. He was chief risk

officer at the time of the failings. If

any single person should have been

on top of the controls and systems to

ensure this kind of blunder couldn’t

occur, it was perhaps him.

The episode has reawakened

concerns both about controls and

about the bank’s relations with

regulators. As one livid fund manager

put it: “It has unwound, in a single

stroke, years of confidence-building in

the risk controls in the business.”

Barclays does seem to have

cleaned up its act since the Diamond

era, though it was fined £26 million

in 2020 by the Financial Conduct

Authority for mistreating consumer

credit customers as recently as 2018.

For retail customers it is doing OK,

scoring well in the Competition

and Markets Authority’s annual

league tables.

The latest affair could probably

have been quickly forgiven by

shareholders, but for one thing — the

dismally performing Barclays share

price. Over one year, it is by far the

worst performing UK bank, its shares

dropping by 21 per cent. HSBC is up

23 per cent, Lloyds up 10 per cent and

NatWest up 9 per cent over the same

period. Barclays has also

underperformed US investment bank

rivals such as JP Morgan and

Goldman Sachs. The record is no

better over five years.

Most chief executives get the

benefit of the doubt for at least their

first year or 18 months. But the

honeymoon is already over for

Venkat. No one will forgive him or

the wider Barclays board if the

cavalier, accident-

prone, regulator-

baiting image of the

bank takes hold

once more.

’’

Patrick Hosking is Financial Editor

of The Times

Purplebricks

hit by delay

in signing off

new chief

Tom Howard

Purplebricks has had to delay the

formal appointment of its new chief

executive because she is yet to be signed

off by the regulator.

The online estate agent announced

almost a month ago that Helena Mars-

ton, its chief operating officer, would be

taking over from Vic Darvey, who left

abruptly owing to “personal reasons”.

The group had hoped that, after a

handover period, Marston, 39, would

formally take over the running of the

company this week. However, Purple-

bricks has announced that it has yet to

be given the green light from Aim,

London’s junior market, to promote her.

“Due diligence checks required by

the Aim rules are ongoing and there-

fore Helena’s appointment remains

subject to completion of these checks,”

it said in a stock exchange filing yester-

day. A further announcement would

be made “as soon as possible”.

Before signing off new appointments,

Aim officials request details about the

directors and run background checks

on them. Such processes tend to

happen relatively quickly and hold-ups

are not common.

It is understood that Marston is over-

seeing the day-to-day running of the

business with Darvey having now

departed.

Purplebricks has no physical bran-

ches and previously charged a fixed fee

of £999, or £1,499 in London, regardless

of whether a home is sold. However, last

summer it started to return fees in full if

properties had not attracted an offer

within 10 per cent of the valuation.

It was founded in 2012 and was float-

ed in December 2015, when its shares

were priced at 100p. They peaked at

above 500p 18 months later and closed

yesterday down 1.2 per cent at 23p.

As Purplebricks’ new chief, Marston

will be tasked with reviving the shares,

which lost nearly 90 per cent of their

value during her predecessor’s tenure.

She joined the company as its chief

people officer in May 2020 before mov-

ing up to the role of chief operating offi-

cer at the end of last year. Prior to Pur-

plebricks she had held senior human

resources roles at Virgin Media, Jaguar

Land Rover and Vodafone.

She will have her work cut out. Most

recently, the company has been dealing

with an embarrassing admin error in its

lettings business, while a huge profit

warning in November, which it blamed

on a shortage of owners looking to sell

their homes, knocked nearly 40 per

cent off its stock market value.

exchange traded notes — securities

enabling investors to take bets on the

Brent crude price and the Vix, a

closely watched barometer of

stockmarket volatility. The immediate

cost will be an estimated £450 million

as Barclays is forced to buy back all

the improperly issued notes. It has

also delayed a planned share buyback.

Whether that is the final bill is not

certain. Barclays says it has hedged its

exposure but neutralising the damage

sounds difficult, especially in current

markets, and when it is not clear who

it needs to compensate — the original

owners of the notes when it first bust

the limit in February 2021, or

subsequent owners.

The SEC will now investigate and it

is hard to see how this affair won’t

end with a beefy fine. One mitigating

factor may be that Barclays noticed

the mistake itself and self-reported it.

However, it’s not its first offence. It

was fined $97 million by the SEC in

2017 for overcharging customers in

precisely this area.

The mistake has been portrayed as a

relatively harmless failing. Barclays

and quietly dull era for Barclays. But

it hasn’t worked out like that. Legacy

embarrassments continued to plague

it, not least the dispute with Amanda

Staveley. The dealmaker lost the case

last year but it was Barclays that got

the most egg on face. Only last week

German prosecutors and police

raided the Frankfurt offices of

Barclays over a tax evasion scandal

going back years.

Jes Staley, chief executive from 2015

to 2021, soon started to produce his

own embarrassing plotlines. First

there was his improper campaign to

unmask a whistleblower, for which he

was fined. Then there was his or the

bank’s alleged attempt to play down

to regulators his relationship with

Jeffrey Epstein, the child sex offender.

The facts of that remain disputed.

Genuine cock-up and

incompetence rather than dishonesty

or greed seems to have led to the

latest embarrassment. Barclays failed

to update a shelf registration

arrangement with the US Securities

and Exchange Commission. It meant

that it had no right to issue those

Barclays is the

corporate soap

opera that just keeps

on running. Other

companies might

spend a year or two in the spotlight.

Like buses, scandals and blunders

tend to come along in clusters and

then vanish. But not for Barclays,

which seems to have gripped,

appalled and entertained us all for 25

years and more.

Among its banking peers, Royal

Bank of Scotland (now NatWest) has

had its moments of course, as has

Lloyds, but neither seems to have got

into quite so many embarrassing

scrapes over quite such a long period

as the blue-eagle bank.

The episode last week, when it had

to admit it had broken the rules by

issuing without permission $15 billion

of securities to investors, is another

example of the bank throwing itself

unerringly into the minestrone.

Some of the disasters go back to the

1990s, when Barclays lost big in the

Russian financial crisis and the Long-

Term Capital Management implosion.

The board was engulfed in a civil war

that led to the eventual expulsion of

its then chief executive Martin Taylor.

Sometimes, the goofs have been

trivial, as when its chief executive of

20 years ago, Matt Barrett, invited

ridicule when he told MPs he would

never allow his daughter to borrow

on a Barclaycard credit card because

it was too expensive.

In the banking crisis Barclays

escaped nationalisation by the skin of

its teeth, but only by opting to take

fresh capital from Gulf investors in

very murky circumstances. Then

came the Protium scandal, when the

bank used dodgy accounting to

remove $9 billion of toxic assets from

its balance sheet. Then Libor rigging,

then cheating revelations in foreign

exchange and other markets. Then

criticism by the government for using

aggressive tax avoidance schemes

both for itself and its clients.

The bank was seen by regulators as

uncooperative, aggressive and

misleading. Even when told to fire its

chief executive Bob Diamond, it still

wriggled. In a hilarious stand-off with

Lord King of Lothbury, then governor

of the Bank of England, Marcus Agius,

chairman, tried to fall on his sword to

save Diamond, but was told he had to

stay and Diamond had to go.

Diamond’s sacking was meant to

usher in a more contrite, law-abiding

‘‘

Barclays is renowned for being accident prone after a long series of disasters