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Barclays investment chief Rich Ricci stands down Barclays investment chief Rich Ricci stands down
(about 7 hours later)
Rich Ricci, who led Barclays' investment banking division during the Libor rate-rigging scandal, has "decided to retire", the bank has said. The colourful and controversial head of Barclays' investment bank, Rich Ricci, stands to walk way with outstanding bonuses potentially worth millions of pounds after his retirement from the scandal-hit bank was announced on Thursday.
Ricci, 49, who was right-hand man to disgraced former chief executive Bob Diamond, will walk away with a year's salary when he stands down on 30 June. Ricci's pay is not revealed as he is not an executive director, but in 2010 he collected £44m in pay and bonuses. The release of any bonuses from previous years would add to the more than £70m in shares that have been handed to the American-born banker since 2010. The 49-year-old, who owns a string of racehorses including one named Fatcatinthehat, has amassed a fortune since joining the bank nearly 20 years ago.
Tom Kalaris, head of Barclays' wealth management business and another Diamond ally, has also "decided to retire" and will leave on the same day. Both men will step down from the bank's executive committee at the end of the month. The departure of Ricci, who is as well known for his racing tweeds as he is for his City suit and braces, marks the latest of Barclays' efforts to clean up its culture in the wake of the Libor-rigging scandal. But politicians have said the bank still has more to do to restore its reputation.
Eric Bommensath and Tom King are to take over as co-chief executives of Barclays' corporate and investment banking from 1 May, the bank said. Ricci may have become an embarrassment to Barclays' new chief executive, Antony Jenkins, who has staked his reputation on cleaning up the bank after being promoted to replace Bob Diamond, who left in July just days after the bank received its £290m Libor fine. The extent of the manipulation of the key interest rate, and the release of emails showing that Barclays traders offered bottles of Bollinger for rate-rigging, raised questions not only about the ethics of Barclays but the entire banking industry.
Antony Jenkins, current chief executive, who has vowed to instil a new culture in the scandal-ridden bank, said he wanted a "clearer line of sight for myself" over Barclays' investment banking business. Vince Cable, the business secretary, said on Thursday night that the public would be "scandalised" if contracts the size of Ricci's were still being negotiated, "but the sheer scale of his earnings sits uncomfortably with what many small businesses are going through, having been badly let down by banks such as Barclays, who mis-sold financial products, causing enormous damage that is still being felt."
"Since I became group chief executive, a major area of focus for me has been to streamline and improve how the bank is managed, while strengthening control," he said in a statement. Trade union officials welcomed the departure of Ricci, who they said "represented everything that was wrong with the banking industry in general".
"Today's changes are the next step in that journey, and they will ensure we have the right senior team in place." "No doubt Mr Ricci will be leaving on terms that ordinary Barclays workers who lost their jobs could only dream of," said Unite's national officer, Dominic Hook.
While Jenkins said he was "grateful" for Ricci's "major contribution" at the bank over the past 19 years, he said in February that he intended to "shred" his predecessor's legacy.
Another banker who was part of a close-knit team put together by Diamond, Tom Kalaris, will retire on 30 June. The wealth management division Kalaris ran has recently been embroiled in controversy over allegations in an independent report that it had pursued "revenue at all costs".
While Ricci is to leave with a year's salary, thought to be £700,000, he may yet have millions in bonuses, deferred from previous years ,handed to him after departure.
Barclays insisted the pair would not receive any "severance payment" but conceded that "in future years they will be considered for the release of deferred compensation awards built up during the time of their employment at Barclays".
John Mann, the Labour MP who sits on the Treasury select committee, called on Ricci to give his one year's pay to charity. "They fact they are paying him for another year is outrageous … He has been rewarded for failure – he was Diamond's right-hand man."
As is common with City bankers, Ricci's salary was multiplied many times over by complex and lucrative bonus schemes that, it became clear when they were first made public in 2010, can run for as long as five years in duration.
Along with Diamond and Jerry del Missier, who also quit following the Libor scandal, Ricci was a key member of the trio that built up Barclays' investment bank and negotiated the takeover of the Wall Street operations of Lehman Brothers when it collapsed in September 2008, transforming the size and scale of their business. Lord Oakeshott, the Liberal Democrat peer, described them as the "group of three croupiers".
Last month, on the day of the budget, it was announced that Ricci had cashed in £17.6m of shares, which were among the £38.5m of shares that the bank released to its nine top bankers just as the chancellor was delivering his speech. Kalaris was also among the nine whose share deals were revealed on budget day; he cashed in more than £5.5m worth, taking the total value of shares he has been awarded since 2010 to an estimated £20m.
Pat McFadden, the Labour MP who sits on the banking standards commission set up in the wake of the Libor scandal, said: "Mr Ricci was associated with the very high pay culture at the top of Barclays. Given the record at Barclays of repeated fines for regulatory breaches and very high reward for senior executives, the bank still has a long way to go to regain people's confidence and prove it is changing."
Ian Gordon, an analyst at Investec, told Bloomberg: "The market will see this as an inevitable and appropriate piece of transitioning. Few tears will be shed and the reshuffle will be broadly welcomed."Ian Gordon, an analyst at Investec, told Bloomberg: "The market will see this as an inevitable and appropriate piece of transitioning. Few tears will be shed and the reshuffle will be broadly welcomed."
Jenkins has promised to ring the changes, after the bank was fined £290m last year for its role in the Libor-rigging scandal. Critics questioned whether the bank was really changing when Ricci, who owns a racehorses – one named 'Fat cat in a hat' – was awarded £17.6m worth of shares last month, in an announcement made on budget day. The replacements for Ricci and Kalaris are internal. Eric Bommensath and Tom King are to take over as co-chief executives of Barclays corporate and investment banking from 1 May, and Peter Horrell will step into Kalaris's wealth management role. Kalaris also had responsibility for the US, where a new role of chief executive, Barclays America, is being taken by the former head of Lehman Brothers' investment banking arm, Hugh "Skip" McGee.