If you work for Barclays’ investment bank now, you might want to read and then reread Jes Staley’s recent ‘fireside chat’ at the recent Barclays financials conference. The CEO of Barclays Group could hardly have been more categorical in his support for the investment bank as a key part of the ‘investment banking model.’
“We want to stay close to our existing client base,” said Staley, in explaining the importance of a strong capital markets (sales and trading) business. As rivals withdraw from the market and “capacity leaves,” Barclays will benefit, said Staley: “We like the trajectory of the Corporate & Investment Bank.”
Staley went onto explain how Barclays is ready for action. After reducing the cost income level to a “comfortable place”, he said Barclays is all set, “to grow the bank – to increase technology spend to invest in new algorithms and new trading platforms, and technology to dramatically advance the client onboarding process.”
It wasn’t so long ago, however, that Barclays was also cutting costs. In April it emerged that Barclays had trimmed spending in the investment bank to the lowest level in almost four years. In August it became apparent that Barclays had trimmed 3,000 staff in the three months to June. If Barclays is growing, therefore, not everyone has been feeling it.
Of course, Staley was talking in the future tense and referring to technology rather than human-driven growth, but some of who fell foul of the bank’s recent cost-cutting initiative suggest that the CEO’s sunny optimism is tempered by a more steely presence in the background: Paul Compton, president of Barclays Bank PLC, the legal entity that runs the international division, which includes the investment bank.
In its own description of Compton’s role, Barclays describes him as ‘overseeing executive management responsibilities’ associated with BBPLC. Compton is an old protégé of Staley’s having joined the bank in 2016 after spending nearly two decades in senior operating roles at JPMorgan, where Staley also spent 30 years.
Compton clearly knows how to run an investment bank from an operational standpoint: he was hired into Barclays as COO and one of his roles at JPMorgan was chief administrative officer for the corporate and investment bank. Staley elevated him to president of BBPLC in March, at the same time as Staley himself assumed leadership of the same unit and as Tim Throsby – the man who had been CEO of BBPLC– left.
The Financial Times subsequently reported that Throsby clashed with Staley over Staley’s ‘sacrosanct’ targets, which he (Throsby) thought were too ambitious. However, insiders say that Throsby also acted as a brake against Compton’s cost-cutting zeal. “Paul Compton’s mantra is that net-net, any investment spend needs to come from savings,” says one of those recently let go. “He’s the power there, he won the cost cutting argument against Tim Throsby.”
Barclays didn’t comment for this article, but two of those let go say even technology initiatives in the markets division can be hard to fund in the new environment, despite this being a growth area.
Of course, there’s not only Compton and Staley at the helm of the investment bank. Barclays' markets business is now run by Stephen Dainton, who joined in September 2017 after leaving Credit Suisse while Throsby was in full growth mode, as head of global equities. However, another head of global equities, Fater Bebachir (also from JPMorgan), was hired in April and joined in June and Dainton was subsequently officially made global head of markets, although - curiously - the FCA Register says he's been head of Barclays Capital Securities business since 2018.
Some at Barclays suggest that Dainton benefited from being in the right place at the right time. An equities salesman by trade, he was a former head of equities at Credit Suisse, but left the Swiss bank in January 2017 after poor equities results the previous year. Barclays picked him up nine months later.
"Stephen is a lovely guy and a great sales guy, but he's not very well know outside Europe," says one recent Barclays-leaver. "He's a sales guy who's not really into quantitative trading and the mechanics of the business," says another.
This is where Compton comes in. As Barclays prioritizes electronic trading and revamps its existing Barx product to include equities, it's also where people like Naz Al-Khudairi and Asita Anche are increasingly important. Al-Khudairi joined from Credit Suisse in early 2018 and is head of Barclays' equities electronic trading business. Anche joined from Goldman in 2017 and is head of 'systematic market making, risk centralization & data science.' Insiders say she's leading Barclays' push into AI.
If Barclays is to beat the squeeze and improve returns, both areas wil need to thrive.
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