Pricing in bad behaviour

Barclays’ boss is being investigated by two regulators: the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA). The reason seems to be that the CEO wanted to uncover the identity of a whistleblower within the bank.

Of course this is quite contrary to the bank’s own policies on the matter, as set out in their recent report:

“In September 2016, the Raising Concerns (Whistleblowing) Policy was updated to reflect and accommodate recent FCA regulatory changes. This document sets out Barclays Whistleblowing process and strongly encourages our employees to raise concerns about behaviour and practices that are counter to our Values and Behaviours. To facilitate the raising of these concerns Barclays provides internal and external gateways for employees and others connected with the Bank to report both confidentially and, where permissible, anonymously. Where a person raising a concern wishes to remain anonymous, no attempt will be made to identify them. To promote awareness of the process and in particular the gateways, the Bank delivers annual mandatory whistleblowing training to every employee.”

So it was more than likely to have been a mistake by the CEO.

The really sad thing though (apart from the mistake) was the markets’ reaction. Halfway through the day this was revealed, Barclays share price had risen by over 3%.

What this suggests is that the consequences for banks of inappropriate behaviour are very limited indeed. Or perhaps that since all the banks are so similar in this kind of respect, it makes no difference to investors where they invest in the sector.

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