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Last updated: December 12, 2012 7:58 pm
The former head of Britain’s top financial regulator is to join one of the country’s most embattled banks, as Barclays’ new management seeks to convince the world it is changing its ways.
Hector Sants, who stepped down as chief executive of the Financial Services Authority in June, will join Barclays as head of its newly centralised compliance and government relations functions, in a move that rivals admitted was a coup for the bank.
Barclays has created an executive-level role for Mr Sants, who will report directly to chief executive Antony Jenkins and manage the bank’s relationships with governments and regulators around the world. The former regulator was wooed by Sir David Walker, Barclays’ new chairman, with whom Mr Sants has worked closely.
Friends and associates of Mr Sants responded with surprise that the man who was the UK’s top financial watchdog until the summer was now taking a relatively lowly role below Barclays’ board level.
“What makes it more amazing is that it’s a really high-risk role,” said one. “The reputational risk is huge.”
The appointment is part of the bank’s effort to repair its reputation after the damaging Libor rate-fixing scandal, which led Barclays to pay £290m in penalties to UK and US regulators and the resignations of both its chairman and chief executive in the summer. The bank drew criticism for its confrontational attitude towards its supervisors and a perception that it sought to push regulatory and legal boundaries.
Barclays is also embroiled in several other regulatory issues, including an inquiry by the FSA and Serious Fraud Office into the way it raised capital from Qatari investors in 2008, and a US Department of Justice investigation into improper payments in Saudi Arabia in 2009.
Stephen Gilchrist, chairman and head of regulatory law at Saunders Law, said: “Appointing Hector Sants as head of compliance is a bit like Mary Queen of Scots appointing her executioner to represent her best interests. Talk about gamekeeper turned poacher!”
Sir David and Mr Jenkins have begun what they acknowledge will be a drawn-out process to repair Barclays’ damaged reputation. A strategy review, which is assessing each business line with an “ethical filter” as well as from a profitability point of view, is due to be completed by February.
Mr Jenkins said: “I want to . . . send a clear signal of intent in terms of my personal commitment to delivering a culture in Barclays where compliance is universally welcomed and observed.”
He opted for Barclays, rather than other financial services industry options, in part because of his longstanding interest in banks – he worked for Credit Suisse, UBS and Donaldson, Lufkin & Jenrette before joining the FSA in 2001. Barclays watchers also wondered whether he might also have a longer term interest in moving back to the business side, particularly in investment banking.
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