Wednesday, July 25, 2012

Barclays admits that Libor scandal 'decimated' trust in banks

As reported by the Telegraph, Barclays

has admitted the public’s trust in banks has “been decimated and needs to be rebuilt” as it set out measures aimed at rebuilding its reputation in the wake of Libor rigging.
Regular readers know that there is only one action that Barclays has to take if it ever wants to rebuild its reputation:  provide ultra transparency.

It is only by disclosing on an on-going basis its current global asset, liability and off-balance sheet exposure details that Barclays is providing market participants with the information they need to independently assess Barclays.  With the ability to independently assess Barclays comes the ability to Trust, but Verify.

Any action other than providing ultra transparency is simply putting lipstick on a pig.

Britain’s second-largest lender on Tuesday said the scandal that saw chief executive Bob Diamond and chairman Marcus Agius resign showed “banks need to revisit fundamentally the basis on which they operate, and how they add value to society”. 
Describing the “daunting” task ahead of it, Barclays said it needed a culture change that would see it “affirming key values” with “reinforcing mechanisms” to ensure staff behaved appropriately. Alluding to management and pay, it added “visible leadership” and rewards would have to be aligned to these values....
Hence the reason for adopting ultra transparency.  Sunlight is the best disinfectant and insures that staff behave appropriately.
“Barclays has a real opportunity to use the events of the past weeks to drive a change in its values and practices. I look forward to hearing views on the changes that should be made,” Mr Salz said. “I hope that this review will significantly assist Barclays in rebuilding trust and reaffirming its position as one of our leading institutions.”...
Consider this post your humble blogger's view on the change that should be made.

And by the way, consider it also former Citigroup head Sandy Weill's view as he called for banks to be "completely transparent". 

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