Staley and Barclays: this time it’s different
What kept Jes Staley out of the Barclays job three years ago does not apply in 2015, but this time round his challenges could be even greater.
Jes Staley faces a number of challenges at Barclays
The selected leaking overnight of news that Jes Staley is set to be appointed as the new chief executive of Barclays suggests that, this time around, the committee determining the appointment has made up its mind that the former JPMorgan banker is the man for the job.
Of course, some would argue that any committee empowered by Barclays in this process was a committee in name only, with chairman John McFarlane clearly determined to get his own man after his abrupt ousting of former CEO Antony Jenkins.
That will give some comfort to Staley, who came close to getting the Barclays job three years ago before the group overseeing the appointment executed an abrupt, last-minute U-turn.
Then, a committee including outgoing chairman Marcus Agius, long-term PR adviser Alan Parker of Brunswick, and former Citi banker-turned-adviser to Barclays Michael Klein, had Staley in pole position to succeed Bob Diamond, ahead of life-long commercial banker Jenkins.
Legend has it that, in the end, the Barclays elite and their advisers could not get comfortable with replacing one smooth American investment banker, Diamond, with another in Staley, such was the public vitriol aimed at the former for his perceived role in the credit crunch and the Libor scandal.
Sources close to the situation at the time told Euromoney that the Barclays committee reversed its decision once word had leaked out internally that Staley might get the job; Jenkins became aware of that likely decision, and threatened to walk if he lost out to Staley; the board was worried that Rich Ricci, then head of an investment bank that needed some stability after Diamond’s sudden departure, would do the same.
The same investment bankers that ran rings round Jenkins
So Barclays got cold feet on an outside appointment, for fear that the bank would lose all of its senior management which, lest it be forgotten, was still being lauded for the audacious and successful takeover of Lehman Brothers at the time. Staley retreated to his role at hedge fund BlueMountain.
Given the well-documented problems Jenkins later had in managing Barclays’ investment bank it could now be argued that Staley would have been a better choice in 2012.
But is he the right choice in 2015? He faces a number of challenges.
First, while undoubtedly a talented and successful career banker, Staley is perhaps the only victim of JPMorgan CEO Jamie Dimon’s tall poppy syndrome succession strategy who, most sources say, was not really a genuine threat or contender to become the US bank’s next chief executive. Those close to the bank insist he was not seen as being of the same calibre as others that departed, or are still waiting to see if they face the axe or the elevator.
Second, Staley needs to fight the perception that he is far from a first-choice candidate. Many potential Barclays CEO candidates that Euromoney spoke to over the past few months since Jenkins’ departure said the role offered little or no appeal to them, and insisted they were not in the running. At least he won’t be referred to by his chairman disparagingly as a ‘battlefield promotion’, as Jenkins apparently was.
Third, Staley needs to show he is his own man. McFarlane has a reputation as a hands-on (or controlling) chairman. That’s one of the reasons – alongside life in the public eye, and relatively poor compensation for the size of the task at hand – that other potential candidates gave for not wanting the job. The same investment bankers that ran rings round Jenkins will do the same if they spot any weakness in Staley.
Fourth, Staley needs to show that he is a former investment banker whose knowledge of the industry allows him to take the right approach to what remains the bank’s best business. He must not use his background to be an over-aggressive cutter, or to protect businesses simply because they are ones he understands. For that purpose, he would do well to study the example of his peer Sergio Ermotti, himself a career investment banker away from the firm, at UBS.
Staley might find his timing spot on. There have been subtle recent shifts in sentiment towards both Barclays and the banking industry in the UK. The conversation in the City and Canary Wharf now is less to poke fun at the plight of Barclays, than to bemoan what has happened to one of dwindling band of European investment banks that might be able to compete on an international, if not global, scale. McFarlane seems to like large parts of the investment bank.
Of course in banking, timing is everything. Let’s imagine Jenkins had departed a few months earlier. Barclays would surely have made its first call to a former JPMorgan investment banker who had been out of the industry for a while, seeing his reputation grow. But at the time Barclays was committed to Jenkins. So in the end, Bill Winters took the opportunity that came up at Standard Chartered.