Barclays/Jes Staley: risk-seeking habit lingers on in bank’s structure

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Judging by the behavior of some politicians, shame is out of date. The humiliation imposed on Jes Staley by the UK’s financial regulator’s temporary ban and £1.8m fine is mitigated by another reality: the former Barclays boss would not have found a job at any other major financial institution anyway.

Obvious plot holes in Staley’s account of his ties to financier and sex criminal Jeffrey Epstein forced him to resign as chief executive of the British bank in 2021.

He claims he was not close to the wealthy criminal while he was a top executive at JPMorgan Chase. The Financial Conduct Authority disagrees.

Although Staley plans to appeal, the Financial Conduct Authority is trying to end the investigation by banning him from senior roles at Manchester City. Regulators said he “recklessly” approved a letter from Barclays that made “misleading statements” about his friendship with Epstein.

Lex called Staley “Mr. Tubble,” and his subsequent association with the despicable Epstein quenched his appetite for satire. The banker seemed habitually accident-prone. His mistakes included publicly referring to Barclays as “Morgan” and breaching conduct rules by trying to identify the whistleblower.

In the 2010s, many in the City of London believed Barclays’ culture was rotten, with employees involved in everything from tax avoidance to index manipulation. Staley’s misadventures leave the impression of a business willing to take improvised risks to keep management rewards flowing.

Current boss CS Venkatakrishnan is a more sober figure. Barclays’ reputational problems will diminish the longer it avoids further trouble. The problem for “Venkat” is that he inherited the diversified business structure that Staley retained by defeating American radicals.

Staley insisted that Barclays needed two things to win investor applause, which was impossible at the time. First, trading volumes need to surge, thereby increasing investment banker compensation. Second, interest rates must rise, thereby increasing net interest margins.

Both incidents occurred within the past three years. But Barclays trades at just 0.5 times tangible book value, almost half the level of retail-focused Lloyds. Returns from investment banks remain minuscule compared to the likely cost of capital.

Staley has long since left Barclays. Questions about its balance of risk and reward remain.