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Britain's troubled Barclays bank needs to further overhaul its pay policy after an "overly generous" bonus culture was blamed for problems which sparked last year's Libor rate-rigging scandal, an independent review said Wednesday.
The report was carried out by top lawyer-turned-banker Anthony Salz, who was commissioned by Barclays in July 2012 to examine the bank's culture in the wake of the damaging Libor affair.
The Salz review -- which comprises 24 pages and cost £17 million ($26 million, 20 million euros) to produce -- found that excessive pay and short-term incentives had convinced some staff that they were "unaffected by the rules" after a long period of rapid growth.
Barclays was plunged into crisis in June 2012, when it was fined £290 million by British and US regulators for attempted manipulation of Libor and Euribor interbank rates between 2005 and 2009. The Libor system was found to be open to abuse, with some traders lying about borrowing costs to boost trading positions or make the bank seem more secure.
"Short-term success fed into the pay, bonuses and long-term incentive plans of the senior executives and those who made the money, especially in the investment bank," the Salz report said Wednesday.
"At a time of growth for almost everyone, the cracks were not noticed by Barclays, by the other banks or, to a significant extent, by the regulators. Without being aware of it, Barclays allowed a drift in its cultures."
The report added: "The result of this growth was that Barclays became complex to manage, tending to develop silos with different values and cultures.
"Despite some attempts to establish group-wide values, the culture that emerged tended to favour transactions over relationships, the short term over sustainability, and financial over other business purposes."
Salz also argued that the 70 highest-paid staff at Barclays were simply paid too much in comparison with other banks.
"We could not avoid concluding that pay contributed significantly to a sense among a few that they were somehow unaffected by the ordinary rules. A few investment bankers seemed to lose a sense of proportion and humility," it noted.
The review called for Barclays to strengthen its top management and human resources team, and ensure that pay was linked to the "long-term success of the institution".
It acknowledged that Barclays had already revamped its pay policies and culture -- but warned that more needed to be done.
"If Barclays is to achieve a material improvement in its reputation, it will need to continue to make changes to its top levels of pay so as to reflect talent and contribution more realistically, and in ways that mean something to the general public.
"We also feel that there is more that it can do over time to emphasise forms of recognition for performance other than pay," it added.
In response, Barclays chairman David Walker admitted that the report was "uncomfortable" to read -- but pledged to report back on how it would implement the recommendations.
The 2012 Libor scandal sparked the resignations of three Barclays senior board members, including ex-chief executive Bob Diamond. He was replaced by Antony Jenkins, who was formerly head of retail and business banking.