Critical Evaluation of Barclay's Management's Actions During the Crisis

There are diverse crises banks may encounter such as brand crisis and financial crisis in nowadays banking industry. To avoid the consequence of bank failures, it is important for the crisis management team of a bank to take effective actions to defuse the crisis regardless of whether it is internal or external. Barclays Bank is one of the largest commercial banks in Britain. In June 2012, it was immersed in a crisis of confidence due to the exposure of its interest-rate rigging scandal. After accepting the huge fines, Barclays began to take actions to save the decreasing market value, negative outlook on credit rating and shattered reputation, but it seemed not to work effectively since some mistakes committed in the crisis management. Therefore, this essay will critically assess Barclays’ management actions in the time of its LIBOR scandal crisis.

Effective communication plays an important part in crisis management, but it seems that Barclays failed in its communication with the social media, aggravating the negative effects of its rate rigging scandal. After the scandal was exposed, although Barclays’ senior management responded quickly to the event, issuing two statements on the official website, it was against the basic rules of being open and honest in the information and attitude of the response. Isidore (2012) reported that the Barclays official only stated one reason for manipulating the LIBOR to protect reputation, covering another reason which is reducing losses in derivatives trading. Also, the spokesman should convey the authentic information he knows clearly and directly instead of hiding the truth with platitudes and technical terms (Ashcroft, 1997). However, in the hearings, the former chief executive of Barclays, Bob Diamond was blamed for providing information selectively and contradictorily, displaying an arrogant and defensive attitude. It will always raise speculation about a company’s misdeeds if it presents a stance of defense (Parsons, 1996). Additionally, Barclays failed to issue a sincere apology to the public within an appropriate time. It missed the optimal opportunity to apologize meaningfully from the outset of the disclosure of the LIBOR scandal, which made the public disappointed and angry with its late apology and impenitent attitude (Holmes and Sudhaman, 2013 cited in Brocklebank-Fowler, n.d.). All aspects above indicate Barclays’ poor communication performance and information management which caused damage to its reputation during the crisis.

Likewise, in the time of crisis, a series of actions including the late apology taken by Barclays could only convey the impression of its weak crisis management in terms of admission of liability for the wrongdoing. When Barclays acknowledged its mistake of manipulating the LIBOR rate, its officials also defended that Barclays was not the only one involved in the rate rigging which widely existed in the entire banking industry. Ashcroft