Bank chief executives can survive an official censure, as Jes Staley proved in 2018 – when he kept his job despite being fined £642,000 for trying to unmask a whistleblower at Barclays. A second adverse finding tends to be terminal, however. This time Staley required complete vindication from regulators examining his, and the board’s, description of his relationship with Jeffery Epstein. His resignation signals that he did not get what he needed: he had to go.
What, precisely, do regulators judge that he got wrong this time? Impossible to say until the Financial Conduct Authority and Prudential Regulation Authority publish their report, which could be at least a month away; the only point of clarity currently is that there are “no findings that Mr Staley saw, or was aware of, any of Mr Epstein’s alleged crimes”, says Barclays.
Fine, but the aim of the inquiry was to determine whether “a close professional relationship”, which was the gist of Staley’s account of his dealings with the sex offender financier, was strictly accurate. Regulators are seemingly unhappy with his characterisation.
Staley will contest the findings, as he’s entitled to do. Viewed from outside, however, the most extraordinary aspect of the tale is not the narrow regulatory focus on who said what, and whether the presentation was crystal clear. One keeps coming back to the question of why Staley maintained any form of relationship with Epstein after the financier had been sentenced for soliciting prostitution from a minor in 2008.
There was a Florida visit the following year and then, most remarkably, Staley and his wife popped in by yacht to see Epstein on his Caribbean island in April 2015. Staley was not alone in maintaining links with the convicted paedophile, of course, but even veteran Wall Street bankers touting for deals should be careful about the company they keep. Staley’s judgment was terrible.
Regulatory run-ins aside, his performance as chief executive of Barclays has been better than the pedestrian share price would suggest. The biggest call was doubling up on investment banking, which was a risky bet on arrival in December 2015 but Barclays’ financial returns have gone back to respectable levels. Staley’s vision of a “transatlantic” bank that combines UK mortgages and Wall Street trading has prevailed. Edward Bramson, the activist who agitated for a retreat from investment banking, was defeated by numbers.
In its clinical way, the stock market marked the end of the Staley era with a fall of only 1% in Barclays share price. The boss was seen as likely to leave soon anyway, and the new chief executive is CS Venkatakrishnan, a Staley recruit from JP Morgan who will not upset the broad strategy.
But even publication of the regulators’ report, assuming Staley does not manage to overturn the findings of a 20-month inquiry, will not quite be the end of the story. There are also questions here for Nigel Higgins, the Barclays chair, and the rest of the board.
The directors backed Staley all the way, and there was an air of defiance on Monday as they said they were “disappointed at this outcome” and heaped praise on their man. Is that a wise stance? Staley could easily have been fired after the whistleblower affair. It’s hard to see any upside for the bank in extending a quarrel with its two main regulators.
UK-EU failings have led to Ryanair delisting
Michael O’Leary loves a throwaway line, but his plan to delist Ryanair from the London Stock Exchange sounds advanced. He blames Brexit, by which he means EU rules that require EU airlines to be majority owned by nationals from within the bloc plus a few other European countries that do not include the UK.
One can call it another blow to the standing of the London market, but it is primarily a political failure on the part of the UK and EU to agree a deal on airline ownership. If it’s OK for Swiss investors to own a slice of Irish-based Ryanair, there is no logic in denying UK investors. This is a Brexit loose-end that should have been settled in about five minutes of negotiation.
