Financial Services

Barclays CEO ‘still waiting’ to hear new investor’s views

Staley says bank will return more cash to shareholders as soon as legacy misconduct issues are resolved

Jes Staley, chief executive officer of Barclays: “We are very committed to our investment bank.”

Wed Mar 21 2018 - 13:45

Barclays chief executive officer Jes Staley said he's still waiting to hear the views of the bank's new activist investor, while pointing to the potential for buybacks that Edward Bramson and other shareholders might be craving.

The London-based bank’s head of investor relations has already “had a brief meeting” with Mr Bramson’s Sherborne Investors, Mr Staley said as the firm emerged this week as one of Barclays’s biggest owners.

The CEO reiterated the lender will be in a position to return more cash to shareholders as soon as legacy misconduct issues are resolved. “We look forward to hearing what his thoughts are,” Mr Staley said on Wednesday, adding that Mr Bramson hasn’t said anything about the bank’s strategy.

“Any major investor, be it Capital Group or Tiger Global, that has a shareholding of this size clearly is keenly interested in what the bank is doing, and we look forward to articulating what our vision is for the bank and hearing what they think about it.”

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Fraud

Pressure on the CEO increased this week after Mr Bramson acquired 5.2 per cent of the voting rights in the British bank, with the aim of pushing for strategic change to lift the shares, a person familiar with the matter has said.

Mr Staley, a former JPMorgan Chase executive, has bet his reputation on boosting returns and overhauling the investment bank, which is Barclays’s worst-performing division.

“We are very committed to our investment bank,” Mr Staley said when asked what investors think of the unit’s performance, citing merger advisory mandates and big bond deals the firm has won recently.

“We like the progress that we are making,” but “we get questions, and obviously we are going to have to answer those.”

US asset manager Capital Group is Barclays largest shareholder, with 7.1 percent of the shares, while Tiger Global Management, the hedge-fund firm run by Chase Coleman, acquired a $1 billion stake in November.

Before Barclays can consider buybacks, it must first resolve a legal battle with the US Department of Justice over the pre-crisis sale of toxic mortgage bonds, Mr Staley said.

The DOJ sued Barclays for fraud in December 2016 after the bank refused to pay the amount the government sought. At the time, people familiar with the situation said the lender was willing to pay no more than $2 billion to settle.

The two sides revived discussions about reaching an out-of-court settlement last October, Mr Staley, 61, is also awaiting the outcome of a UK Financial Conduct Authority probe that could determine his future at the lender after he repeatedly attempted to unmask a whistle-blower.

In 2017, Barclays’s board found that Mr Staley “honestly, but mistakenly, believed” he was permitted to try to reveal the identity of a person expressing concerns about a bank executive. Mr Staley declined to comment on when he expects a resolution.

Dividend

Last month, Barclays said it will return its dividend to previous levels, and consider stock buybacks for the first time in more than 20 years, as its capital buffer rose in excess of its target. Revenue from its markets unit, which trades stocks, bonds and currencies, also fell less than expected and that of its Wall Street peers.

The dividend boost, which will restore the payout that Mr Staley cut in 2016, is a sign executives are confident the bank’s slimmed-down balance sheet has enough capital to survive another crisis and settle some remaining misconduct issues.

Mr Staley said lawmakers in the UK and Europe should pay close attention to President Donald Trump’s tax cuts and promised softening of banking regulation, which indicate the US is “very actively trying to make the environment as business-friendly as possible.”

The “dramatic” corporate tax cut will boost Barclays’s earnings in the US, where it does about 40 per cent of its business, he said. Barclays stock is down about 7 per cent in the past 12 months, trailing the 1 per cent gain by the Bloomberg Europe Bank and Financial Services Index.

“We are on course to deliver what we promised shareholders in March 2016,” the CEO said, referring to when he laid out his strategic vision.

“Returning excess capital to our shareholders is what we have to be focused on doing.”

– Bloomberg

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