Yesterday the news emerged that Barclays Bank has been handed a record fine of £290 million for manipulating an inter-bank interest rate. Today the Financial Services Authority has named Barclays as one of four high street banks that has mis-sold insurance to small businesses. Earlier this year it was caught dodging its taxes and ordered to pay £500 million. Last year it mis-sold income protection insurance and had to pay out a billion to compensate its customers.
Clearly, this week’s revelations are part of a major cultural failing at Barclays. It is a business that has repeatedly been caught using fraudulent practices, showing contempt for its customers, and trying to avoid its responsibilities to society. Banks don’t have to operate like that. They can be good citizens, and for evidence of that you need look no further than Barclays’ own history.
The origins of Barclays bank go back to 1690 and a Quaker named John Freame. He had just finished his apprenticeship in a local bank, and set up a goldsmith on Lombard Street in London. Quakers were a persecuted sect at the time. They were banned from the army, from universities and from holding public office. As a result, they tended to start their own businesses and look after their own. Barclays was one such company.
Quakers may have been reviled by their Church of England peers, but nobody doubted their integrity. They were known to be uncompromising, dedicated and scrupulously honest. That made them very good bankers – you could trust your money to a Puritan. Freame’s bank started out handling the finances of fellow Friends, and as he grew he took on a new partner, Thomas Barclay. They became one of the key funders of the industrial revolution, financing factories, railways and canals.
From the outset, they ran a principled business. To go bankrupt or to fail to repay a debt was considered unacceptable by the Quakers, as it was going back on your word. The bank was more prudent and more risk averse than its competitors, but was also considered more dependable and stable in return. They would not finance war or arms, leaving that to their great rivals Barings and Rothschilds. They forbid their trading ships to carry guns, preferring to run the risk of piracy than being responsible for bloodshed. Barclays also refused to have anything to do with slavery, a hundred years before the rest of the country caught up with the idea and outlawed it from the British empire.
By the Victorian era Barclays was the biggest bank in the country and that legacy was already eroding, but it has gone through the shredder in recent years. In the 80s it was known for bankrolling the apartheid regime in South Africa, and then Mugabe’s Zimbabwe. In 2010 the bank was sued for £190 million by the US government, for breaking sanctions on a string of countries including Iran, Libya and Burma.
From that early pacifist stand, the bank is now a major funder to the arms industry. In 2008 it held £7.3 billion in shares in arms companies, including companies that produce cluster munitions and depleted uranium – two weapons categories most likely to harm civilians. It is also Britain’s biggest player in speculation on food, a predatory practice that drives up the price of food.
Perhaps its not too late for Barclays to reclaim their corporate culture. All the inspiration they need to be a good corporate citizen is their in their own history, but it won’t happen under Bob Diamond. Barclays shareholders need to make their voices heard, and so do their customers.