Barclays boss Antony Jenkins faces one of the biggest tests of his leadership this month when he decides whether the bank, Britain's third largest, should fight accusations it deceived and defrauded customers in the United States.
If Jenkins accepts the allegations, made in a lawsuit filed by New York's Attorney General, he will face a dilemma arising from his pledge to jettison any business that does not fit into the bank's new, squeaky-clean image.
But the U.S. trading desk at the centre of the allegations is part of Barclays' equities business, an area it had planned to keep largely intact while shrinking its investment bank.
It comes at a time of mounting discontent among investors. Some say that after almost two years in the CEO hotseat Jenkins is failing to turn around both culture and performance.
Barclays' shares are down around 9 percent, close to two-year lows, since the lawsuit was filed, compared with a 3.5 percent fall in European bank stocks in the same period. They have also underperformed their European peers since Jenkins was appointed in 2012.
"We are concerned about some of the revenue and cost trends and the pace of management implementation," said Colin McLean, managing director of SVM Asset Management, which owns Barclays stock. "There's a gap between the promises and the actual delivery, particularly on costs and bonuses," he said.
Fighting the allegations from the New York attorney general would be a high-risk gamble, as other banks have found when they have taken on the authorities. If the allegations are proven to be even partially true, Jenkins's credibility as the man to lead Barclays out of its scandal-scarred past would be in tatters.
Investment banks' in-house platforms for buying and selling shares, known as dark pools, are under investigation by authorities in the United States and Europe amid allegations they have been used to rip off some investors.
New York Attorney General Eric Schneiderman said in his lawsuit he had evidence that Barclays staff falsified marketing material and misled big institutional clients in an effort to grow its dark pool to increase revenues and bonuses.
He said that occurred from 2011 to as recently as April, some 20 months after Jenkins took the helm, unlike other conduct issues the bank has faced, which occurred before he became CEO.
Barclays has hired external lawyers to help it investigate the allegations, including Matthew Martens, formerly the chief litigator at the U.S. Securities and Exchange Commission.