Barclays banks on the value of reputation

New Barclays CEO Antony Jenkins last week effectively laid out his battle plan for cleaning up the venerable UK institution.

Alec Mattinson: 'In Antony Jenkin's view, reputation is a fundamental part of businessstrategy and a direct driver of success and profit.'
Alec Mattinson: 'In Antony Jenkin's view, reputation is a fundamental part of businessstrategy and a direct driver of success and profit.'

By attempting to put ethics at the heart of the business - issuing a 'shape up or ship out' edict to the bank's staff - he has placed Barclays at the centre of the ongoing debate over the extent to which reputation is a business critical issue.

There is little doubt Barclays has some ground to make up. Edelman's annual Trust Barometer, published this week, once again saw banks at the bottom of trusted sectors and the Libor fixing scandal has put Barclays at the lower end of this.

Jenkins' point looked even more prescient earlier this week when a previously suppressed report emerged criticising Barclays Wealth in the US for its 'revenue at all costs strategy'.

The bank is undeniably ensconced in a reputation crisis. But reporters have found little difficulty in locating Barclays traders chuckling at the idea that Jenkins would turn his nose up at huge profits garnered from unauthorised sources.

This gets right to the heart of the issue. In their view reputation is a fluffy add-on - all that matters is pounds and pence. In Jenkins' view - and enough people have told me he genuinely believes this - reputation is a fundamental part of business strategy and therefore is a direct driver of success and profit.

There are a host of reasons to see Barclays' reputation as a business issue. It may only have a limited impact on customer choice, but it is more likely to affect its corporate banking business, where customers are just as mindful of their own reputations.

Rehabilitation brings back the bank's legitimacy as a leader in the sector and it will inevitably find a kinder ear in the regulatory environment.

Jenkins' ethical blueprint throws up as many questions as it answers - what, for example, happens to its investment banking or tax planning businesses under this new code?

But whereas former CEO Bob Diamond played around the edges of reputation, Jenkins must follow through as he is staking his job on it.

Discussing the high stakes nature of reputation management brings to mind the week's other major PR story - the public mea culpa of Lance Armstrong. The parallels between a drug cheat cyclist and a bank may not immediately be apparent, but both illustrate a salient point.

No matter how good their PR is, any company or individual that does not live the values that foster good reputation will find their flaws coming back to bite them in the end.

alec.mattinson@haymarket.com.

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