US Investment Veteran Tipped to Take Over Barclays

Jes Staley, who just a few years ago was top of the list to take over as CEO at JP Morgan, has been (unofficially) hailed as Barclay ‘s top choice to replace Antony Jenkins. But, while he has a lot of support, there are many with questions to ask of him, who are concerned that his appointment may herald a return to “a more aggressive style of banking.”

58-year old Staley is anything but short on credentials. He ended his 34 year tenure at JP Morgan Chase, where he headed their investment bank, in 2013, after he grew tired of waiting for Jamie Dimon, the then CEO, to step down – at the time, Staley was the out and out frontrunner to take over Dimon ‘s position. It was also around this time (2012) that Barclays first considered him to take over after their last American CEO, Bob Diamond ‘s unceremonious forced resignation.

Diamond was forced to leave after public chastisement from Mervyn King over interference with and rigging of the Libor rate. Many board members singled out Jes Staley as a good replacement but their decision was blocked on financial grounds (it would ‘ve cost around $30 to buy Staley out of his contract with JP Morgan) and also for PR reasons – hiring another American investment banker to replace Diamond would not have gone down well in the public eye.

Indeed large part of the scepticism surrounding Jes Staley even this time round is based on fears that his appointment (before it has even been officially announced) may signify a return to the kind of banking represented by so-called “casino bankers” like Diamond.

Those worried believe that Staley ‘s heart remains firmly in investment banking, with Mark Garnier, of the Treasury select committee expressing concern that “he doesn ‘t strike me as the right person to take over a retail and commercial bank.”

Other critics include Vince Cable, who argued that appointing Staley would do nothing to repair the already faltering relationship between British banks and smaller businesses that he described as borderline alienating.

Back in 2012, Barclay ‘s, on fairly sound advice, decided to go for a more apparently sensible option and instead hired Antony Jenkins ñ a decision that, according to one board member, took 3 years to reveal itself as the wrong one. Jenkins ‘ exit managed to be somehow even less ceremonious than his predecessor ‘s when he was sacked this summer.

Those on the board are looking back and realising that they may have been right all along when they first backed Jes Staley to take over. And now that the $30 buy-out from JP Morgan is out of the picture, and now that the “hysteria” that forced Barclay ‘s hand in hiring Jenkins has died down, the deal is somewhat sweetened.

The move has been hailed as a turn from self-punishing economic politics to a more constructive attitude of ” ‘let ‘s get the economy working ‘” by Anthony Browne of the British Banker ‘s Association and is in keeping with George Osborne ‘s current plan to ease pressure on City workers.

However, while some are claiming that the appointment of Staley will signal a boost in investment banking, some insiders believe that he is actually more likely to do the opposite, saying that “if anything he is more aggressive than we have been.”

Despite disagreement exactly how Staley plans to use his investment experience (though the general consensus does seem to be that he will not actually increase capital spending or reduce cuts), one senior member of the Barclays team maintains that “what is clear from the Antony Jenkins experience is that the risk of hiring someone who doesn ‘t understand investment banking is greater than someone who doesn ‘t understand retail banking, which you can pick up pretty quickly.”

Whether or not this reassurance is enough to quell the worries of critics like Vince Cable and Mark Garnier, however, remains to be seen.

Indeed while many are looking positively on Staley ‘s appointment, shares still dropped in Barclays when news of it was leaked. Shareholders and analysts, however, remain largely optimistic, at least publicly. One in particular said that “bringing in an investment banker who was served at the knee of Jamie Dimon makes sense.” And Citigroup analyst Ronit Ghose went further, arguing (almost tautologically) that “you need a credible investment banker to restructure an investment bank; it is like decommissioning a nuclear reactor ñ you need a nuclear physicist to do it.”

When we look at a general character profile of Jes Staley, he seems a far cry from the bullish, aggressive investment bankers characterised by the likes of the shamed Bob Diamond. Indeed far from aggressive he is described variously as “balanced”, “reflective” and “respectful”; man whose main focus is on building employee relations and developing strong teams rather than undermining or bullying those below him. He even championed internal LGBT movement JP Morgan Pride and has funded and promoted LGBT rights extensively as well as personally acting as a mentor to many female executives at JP Morgan.

But aside from ad hominem critique or praise, there is still a genuine worry (and one that we will only be able to judge as time goes on) that Staley ‘s inexperience in UK banking is something that he will have to work hard to overcome. His relationship with the chairman who sacked Jenkins, John McFarlane (known affectionately as ëmac the knife ‘ due to his penchant for sacking CEOs) will perhaps be most telling. McFarlane has not shied away from making known his target of doubling share prices in Barclay ‘s in the next three years, and whether or not Staley ‘s first moves will work towards this or not could be prophetic.

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