Barclays chief faces investigation
Barclays chief executive Jes Staley will lose his annual bonus after two UK regulators opened an investigation into his conduct in a whistleblowing case. Lex's Jonathan Eley and Christopher Thompson discuss what it means for the bank and its chief.
Filmed by Rod Fitzgerald. Produced by Daniel Garrahan
The Barclays chief executive, Jes Staley, will lose his annual bonus after two regulators, the Financial Conduct Authority and the Bank of England's Prudential Regulation Authority, opened an investigation into his conduct in a whistleblowing case. The bank's policies for handling whistleblowing are also being investigated. So what does this mean for both the bank and its CEO?
Lex writer, Christopher Thompson joins me now. Chris, first of all, Barclays made this statement today. It ousted itself, if you like. What are the specifics of this particular case?
Well, this case relates to some anonymous letters. This is all according to Barclays, by the way. That's the only version of events that we have. Though these anonymous letters which were criticising senior appointment that the bank had made.
And according to Barclays, Jes Staley, taking this rather personally, wanted to uncover the identity of the person who was writing the letters. And he was told, I think it was in June of last year, that he couldn't do this. And so Barclays conducted an internal investigation. The matter was closed.
The following month, Jes Staley, thinking the matter was closed according to the bank, thought well, I still want to know who was writing these letters. And he commissioned both an internal team, security team, in the bank and also with the support of an as yet unnamed US security enforcement agency to, again, try and uncover the identity of whoever was writing these whistleblowing letters. And he has been criticised for both those things by the board. However, they say that Mr. Staley retains their unanimous support, although his bonus is likely to be cut, perhaps completely, and they will publicly reprimanded him.
As to the investigations by the FCA and the PRA, we do not know yet. They may decide to take a tougher line. If they deem it so, they can ban someone from actually working in the city. But shareholders, the share price has barely moved today, are in my opinion remarkably sanguine about any further sanction.
Now Barclays in its statement expressed its unanimous view or unanimous confidence rather, the board, in Jes Staley as CEO. Shareholders still seem to want him to stick around as well.
Why is that, given the obvious potential for brand damage here?
Right, well, I mean Barclays since the financial crisis has been through a pretty turbulent period and a kind of succession of various chief executives. And Jes Staley was bought in. He was brought in partly to revive the investment bank. He's an investment banker himself by background. And I think on whole-- he was brought in I think in December 2015-- he has done a pretty creditable job of not only restructuring the institution, but improving profitability, particularly of the investment bank, of course, aided by somewhat more buoyant capital markets this year than we saw last year. As a result the share price is nearly back up to where he began. But it's no surprise that they want him to stay, because they see the trajectory that he's taking the bank on is very much upwards.
And judging by the share price reaction today, they think he is likely to stay, I'm guessing. Do you agree with that or do you think that they're being a little bit overconfidence in their assessment?
I personally think they're being overconfident. I think there's considerable-- I think at the very least, there's considerable uncertainty going forward. And I think that there is a risk for something bad to happen. I think there's a risk he could go, to put it frankly. I think doing nothing, it appears to think the shareholders bought the story that basically the board have given their support. They are going to take some money off Mr. Staley, come what may from regulators, maybe a fine, maybe a public censure, but nothing more.
I think regulators are here. They're incentivised to some extent to make an example of someone. That's what I fear. And so I think that the consequences could be a lot more dire than what the share price has baked in at the moment.