Someone else who also recently stepped down is Sir Hector Sants, the former head of compliance at Barclays. Sants, a one-time Credit Suisse banker, ran the wholesale division of the British regulatory authority, the Financial Services Authority, from 2004 to 2007. He was then promoted to run the whole organization, which he did until the FSA was dismantled in the middle of 2012.
This period was definitely not the finest hour for British financial services. Nevertheless, Sants received a knighthood in the 2013 New Year honours list. This is bizarre. It was on sainted Sants’ watch that the FSA waved through the acquisition of Dutch bank ABN Amro by Royal Bank of Scotland. This mistake cost British taxpayers billions of pounds. It was also while Sants ruled that the government stripped the former RBS boss, Fred Goodwin, of his knighthood. Yet the man who effectively approved the deal, Hector Sants, then gets a knighthood. I am bewildered.
With his knighthood firmly in place, Sants bounced off to be head of compliance at Barclays. Sources murmur that he was in line for a compensation package of some £3 million (made up of salary, bonus and potential participation in a long-term incentive plan). Unfortunately, in October of last year, Sants took a sabbatical, suffering from stress and exhaustion. He then decided not to return to the bank.
Barclays’ CEO, Antony Jenkins, and chairman Sir David Walker, made a mistake hiring Sants. The appointment was a headline admission – just in case anyone had been asleep for the past few years – that the bank had regulatory problems that needed to be addressed. However, now that Sants has limped off, the assumption has to be that what he found at the bank was less palatable than he envisaged. Nobody goes on leave for "stress and exhaustion" if everything is plain sailing. And it certainly didn’t help the firm that around the same time that Sants slipped away, Shaygan Kheradpir, Barclays’ chief operations and technology officer, also resigned. At least the head hunters will be kept busy, but one does rather get the impression that Barclays is a leaking and listing ship. A source grumbled darkly: "The way things are going, I wouldn’t be surprised if the current Barclays bosses dissipated all the benefits of the Lehman’s acquisition. In a competitive landscape, you need to be constantly moving forward."
Another source made a more general comment: "Basically, the regulators funked it! Despite all these new rules, lower leverage and higher capital requirements, they never dealt head-on with the too-big-to-fail problem. During the crisis, big banks got bigger: think JPMorgan, Bank of America and Barclays. Will that keep us safer and make the world more secure? I don’t think so. I believe we’ve just created institutions that are too big to run properly and therein lies the seeds of the next crisis. Of course, authorities have devised blueprints for bailouts and winding down institutions caught up in a death spiral. But I’m not convinced that in the glare of the headlamps, these won’t prove too complex and time-consuming. The best solution would have been Glass-Steagall Mark II, a complete division between commercial and investment banking. But the authorities baulked because that would have meant reneging on a lot of what they had countenanced during the crisis."