LONDON (Reuters) - Failures in regulatory compliance at Barclays (BARC.L) and the tough task of overseeing huge numbers of staff are arguments for forcing big lenders to be split up, a lawmaker on Britain’s banking standards commission said.
“If it’s not possible to run compliance of a big organization with one person taking responsibility then should we be breaking them (banks) up into smaller sizes so it is possible to run compliance?” Mark Garnier, chairman of a panel of lawmakers assessing corporate governance, asked on Wednesday.
“It sounds like a great argument for a full separation of banks, break them up,” Garnier said in response to comments by Barclays on the difficulty of overseeing all its staff.
The panel is part of the UK’s Parliamentary Commission on Banking Standards, which was set up after Barclays admitted rigging Libor interest rates. The Commission is also assessing if proposals to shield banks’ retail operations from riskier investment activities go far enough.
Garnier was reacting to comments made by senior Barclays staff being quizzed about corporate governance and compliance functions below board level.
“It is not the compliance function’s responsibility to make Barclays compliant,” said Mike Walters, head of the bank’s compliance. “Complying is part of the culture but compliance is the responsibility of everyone at Barclays,” he said.
Garnier responded that there was “a rather hazy” management structure for such a big, systematically important bank.
The bankers said mistakes were made that allowed the past manipulation of Libor interbank lending rates to occur.
“Mistakes were made and controls were inaccurate ... it has caused a lot of reputational damage. We recognized there were areas that weren’t as strong as they should have been,” said Robert LeBlanc, chief risk officer at the bank.
Reporting by Steve Slater and Matt Scuffham; Editing by Hans-Juergen Peters