Barclays Chair Backs Embattled Staley Over Whistleblowing Probe
May 10 2017 - 10:13AM
Dow Jones News
By Max Colchester
Barclays PLC Chairman John McFarlane on Wednesday defended the
bank's chief executive, Jes Staley, as several shareholders called
for the U.S. banker to be fired over his role in trying to unmask a
whistleblower
Mr. Staley faced criticism after U.K. regulators launched a
probe over his repeated attempts to try to reveal the identity of a
whistleblower who sent letters criticizing a hire he made. At the
bank's annual general meeting a couple of shareholders called for
Mr. Staley to be replaced. "Has the behavior of the chief executive
bought nothing but shame on the name of Barcays?," asked one
shareholder.
Mr. McFarlane said he stood behind Mr. Staley. "You know me. If
I believe he should go, you know he would go," said Mr. McFarlane,
who is often dubbed "Mack the Knife" because of his track record in
axing top executives. He said Mr. Staley had "gone through a red
light" and "when you go through a red light you don't lose your
license."
Mr. Staley had made a mistake and wasn't planning to do anything
malicious to the whistleblower, he said. "All he wanted to do was
phone them up and ask them to stop sending the letters," he said.
The Barclays board has reprimanded Mr. Staley and said it would
dock a chunk of his bonus after the regulators' probe finishes.
Mr. Staley took an additional hit last month after The Wall
Street Journal reported he became embroiled in a battle with KKR, a
major client of the bank, after backing his brother-in-law who is
locked in a dispute with the private equity giant. KKR has recently
cut Barclays off from some of its business as a result of the
executive's interventions, according to people familiar with the
matter.
One major investor said it is in "wait and see" mode ahead of
the whistleblowing probes' conclusions. The Barclays board
meanwhile has endorsed Mr. Staley over both matters and hopes the
current concerns will subside by the time the regulators'
investigations are finished, a process that could take up to a
year, according to one person familiar with the board's
thinking.
Barclays is on its fourth leader in five years. So far investors
have broadly welcomed Mr. Staley's strategy of backing the Barclays
investment banking franchise while shedding numerous businesses
around the globe. But returns remain tepid. Next month Barclays is
expected to announce the closure of its "non-core" division which
houses assets the bank wants to ditch. Even as this milestone
approaches investors are turning to other worries, namely that the
bank's capital base is too thin.
Barclays is locked in a legal battle with the Justice Department
over its role in the sale of toxic mortgage-backed securities. It
also has to drum-up extra capital to pump into its U.S. unit to
ensure it can pass stress-tests. A plan to sell down its African
business is still waiting on regulatory sign-off in South Africa.
Analysts at Goldman Sachs last week expressed worries that Barclays
is undercapitalized compared with European peers but played down
the idea the bank would have to tap shareholders for cash. "We
believe an external capital raise is low on the list of capital
build options," analysts at Goldman Sachs wrote in a recent
note.
Mr. Staley said that the bank "still has a lot more work to do,"
especially in upgrading its investment bank.
Write to Max Colchester at max.colchester@wsj.com
(END) Dow Jones Newswires
May 10, 2017 09:58 ET (13:58 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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