Barclays' Reputation Damaged by Interest-Rate Scandal

Bank Has Two PR Agencies But Says It's "A Little Soon"to Talk About Fixing Brand Image

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Barclays Bank is in crisis, and without much of a public-relations plan, if any, in place yet. The U.K.'s second-biggest lending bank has been fined $455 million for manipulating interest rates, and once wrongdoing is exposed, the British public wants to see heads roll.

The story so far: Chairman Marcus Agius, in an attempt to keep Barclays star CEO Bob Diamond, offered to resign. But it was Mr. Diamond's scalp that the public demanded. The American-born banker, widely called the "ugly face of capitalism," was the highest-paid CEO of a major U.K. company, reportedly earning more than $30 million last year.

So Mr. Diamond resigned this week after 18 months in the job and 16 years at the bank, although without apologizing for Barclays' rotten culture.

The bank now faces the difficult challenge of salvaging its reputation. Barclays has brought in Omnicom Group's Portland PR to help with crisis management, on top of its existing relationship with financial PR firm Brunswick. Portland did not return Ad Age 's call, and a Brunswick spokesman said, "I'm not sure I want to talk about it," and didn't call back. A Barclays spokesperson said it was "a little soon" to be talking about plans to repair the brand.

David Wheldon, formerly Vodafone's global director of brand and president of BBDO Europe, joined Barclays Group in February 2012 as head of brand, reputation and citizenship. Mr. Wheldon did not return Ad Age 's call, but clearly has a lot to do if he is to restore the bank's reputation and make the company a better citizen. Like many big corporations, Barclays has a long-term "Citizenship" plan, focusing on access to banking services for all and investment in a low-carbon economy, but these good works are now heavily overshadowed by the perception of dishonesty at the heart of the organization.

Barclays also sponsors the hugely popular "Boris bikes," a bicycle rental scheme named after London's mayor, Boris Johnson. Mr. Johnson once famously paraphrased Marilyn Monroe by saying, "Bob Diamond is a mayor's best friend." This type of alliance, however, shows Mr. Diamond's connection to Britain's political elite -- among whom Mr. Johnson is a central figure -- rather than the British public.

If Barclays and its advisers aren't talking, plenty of people have an opinion on what the bank, which was founded by Quakers in London in 1690, should do next.

Luke Williamson, a partner at independent London agency Fabula, had his own run-in with Barclays, when $30,000 from the sale of his house was siphoned out of his account by an internal fraudster. It happened four times.

"They were so casual about it. The way they deal with people is about numbers rather than what's best for customers," Mr. Williamson said. "It's difficult to change a company culturally, but it can be done. It's not operational, it's about creating communities and incentivizing people in new ways -- not just chucking bonuses at them. All that does is make people do anything to get their bonus."

Ironically, Barclays' current ad campaign by BBH London uses the endline, "Take one small step," and focuses on the financial needs of individuals.

Andrew Robinson, head of corporate PR at BETC-Euro-RSCG' class='directory_entry' title='Ad Age LookBook '>Euro RSCG London, who has a background in financial PR, said "[Barclays] can start by reaching out to opinion leaders and reassuring them that Barclays is heading in the right direction. We call it creating a 'warm bath' around the issue -- although this one's a lot deeper and colder than that ," he said.

Tim Fallon , managing partner of the College Hill Group, stresses the importance of reconnecting with consumers. "There's a sense of arrogance," he said, "Barclays and banks in general need to demonstrate their integrity, to put the customer experience at the center of what they do, and to show that life isn't all about financial performance and business."

Along with reconnecting, Mr. Fallon advises Barclays to acknowledge that they've messed up and to say sorry, and then put a central figure in control. He said, "Bob Diamond didn't provide leadership -- he said there was no problem -- and Agius is only there until a new CEO is appointed. Barclays needs someone to stand up and be the voice of reason, someone who will come forward and sort it out. Without that , their reputation is just floating along on the water, being hit from all sides."

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