July 10th, 2012
04:12 PM GMT
London (CNN) – Flicking through Barclays’ 286-page annual report, it’s impossible to avoid a grinning former CEO Bob Diamond – once branded "the unacceptable face of banking" - making a range of pronouncements, which in the wake of the Libor rate fixing scandal now sound profoundly hollow.
Take this old chestnut from Diamond, much touted since banks were caught on the back foot during the 2008 credit crunch: "Banks need to become better citizens."
Or listen to this snippet: "When we’re at our best, we serve the real economy by doing our best for all our stakeholders: our customers and clients, the communities we serve, our people and our shareholders."
Bankers I have spoken to this week say staff at the investment bank - the jewel in Diamond’s Barclays crown- feel "rudderless" without a strong figure to stick up for them.
They say mistakes are on the rise and some trades haven’t been booked properly - costing the bank a "few hundred thousand [euros]."
One employee, speaking on condition of anonymity, said: "No-one is as motivated as they were before."
The person added, "people are leaving and they aren’t being replaced. The money just isn’t there. Clients aren’t trading as much as they were before. Generally business was bad before the Libor issue."
A spokesman said the bank had received "terrific support over the last week from clients, the board and other stakeholders."
We must continue, he added, "to demonstrate through our actions that we can live up to their expectations."
Barclays was handed a record fine for manipulating the Libor and Euribor interest rate floors which are used as a benchmark for pricing trillions of dollars of financial contracts worldwide.
The ensuing scandal has claimed the scalp of Barclays top three executives - including Diamond - and seen the deputy governor of the Bank of England appear before a panel of UK lawmakers to explain himself.
The UK’s serious fraud office has opened a criminal investigation, joining the U.S. Department of Justice which is also probing the matter.
Today a source close to the bank said Barclays would cover Diamond’s legal costs in the event he was investigated.
Testifying before U.K. members of parliament Tuesday, Barclays' outgoing chairman Marcus Agius said Diamond had waived his right to £20 million in bonuses and deferred compensation.
Sources at the bank say Diamond will instead get around £2 million, which includes a year's salary of £1.35 million as well as healthcare and other benefits.
Pay has been down at Barclays for some time and not just at the upper echelons of management, where a proposed £17.7 million package for Diamond this year nearly caused investor revolt.
In fact Barclays' total bonus pool for 2011 was down by a quarter whilst payments to staff at its Barclays Capital investment banking arm - the firm’s key profit driver– shrank 35% over the same period.
Some say that’s as much a reflection of the taboo culture surrounding the City of London’s bonus culture as today’s tricky trading environment.
"There’s a sense that people want a boring bank," says another Barclays staffer.
"They don’t want a bank like ours and that has to have an effect on morale. It’s hard to see where we go from here."
A separate source at Barclays dismissed speculation the bank had discussed splitting its retail and commercial arms.
"It’s madness. Would we do that when we are still searching for a CEO?" they said.
That staffer said: “Obviously lots of people are quite upset about what has happened. And all across the bank, you’ll find people calling up their clients to reassure them.”
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