Jes Staley’s strongest attribute as chief executive of Barclays — instinctive risk taking — has been his downfall. The trigger for his departure is a dispute over business ethics, a problem for the UK bank itself long before he joined in 2015.
The Financial Conduct Authority is evidently unhappy with his characterisation of his relationship with disgraced financier Jeffrey Epstein when he was at JPMorgan. His successor, CS “Venkat” Venkatakrishnan, has the chance to give Barclays a good shake-up.
For Staley, it is a case of three strikes and out. He was lucky to keep his job after he was fined £640,000 for interfering in a whistleblower investigation. Controversy also surrounded his intervention in a dispute between his brother-in-law and KKR.
A cache of emails from JPMorgan suggested Staley’s relationship with Epstein was friendlier than the formal business relationship he had claimed. There is nothing to suggest he was aware of alleged crimes against underage girls by Epstein, who killed himself in 2019. Staley hopes to clear his name, but it is clear he misjudged his engagement with regulators.
Ironically, Staley’s big strategic call — keeping Barclays’ full-service investment banks — was fraught with risk but has worked out well. Barclays’ share price, up 87 per cent in the past year, has performed much better than peers and the broader market. He leaves the bank with a strong capital position, with about £5bn of excess capital for future shareholder distributions.
As former head of markets, Venkat looks like a natural replacement. But ex-Barclayites say he was given that job to groom him as a succession candidate. Four years as chief risk officer means he may be Staley’s polar opposite. Reputedly more consensual and affable than Paul Compton, the other main internal candidate, Venkat may also be less entrepreneurial.
Compton has a reputation for directness on costs. Some middle-ranking executives may believe they are now off the hook.
Chief financial officer Tushar Morzaria, another ex-JPMorgan executive, may not have been interested in the job. His appointment pre-dated that of Staley’s arrival and he shares credit for the bank’s revival.
Venkat has benefited from a crisis without which an external candidate might have been appointed. His task is twofold. The easier part will be to keep Barclays on track as the UK’s sole universal bank with a fully diversified strategy. Higher rates should help the retail side even as corporate financings and securities trading quietens down.
The hard part will be reviving the ethics drive that lost its momentum after the ousting of Antony Jenkins by the board in 2015. Staley has left under pressure from the UK financial authorities, as Bob Diamond did. A bank that has lost two out of three of its recent CEOs this way needs to think hard about its cultural shortcomings. A boss can be right on financial value at risk and still get the reputational equivalent completely wrong.