Barclays Chair Backs Embattled Staley Over Whistleblowing Probe -- 2nd Update
May 10 2017 - 2:44PM
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
brought 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 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.
Separately, Barclays agreed to pay about $97 million in a
settlement after allegedly overbilling clients, the U.S. Securities
and Exchange Commission said Wednesday.
Mr. Staley took an additional hit last month after The Wall
Street Journal reported he became embroiled in a battle with KKR
& Co., 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. On Wednesday, Mr. McFarlane defended this
action too, saying Mr. Staley "didn't actually do anything. He did
consult but we advised him not to do anything."
Some 97% of the shareholders who voted backed Mr. Staley's
reappointment on Wednesday, but 16% of shareholders either
abstained or voted against the CEO following a recommendation to
abstain by a proxy adviser.
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 "noncore" 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 U.S. 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 signoff 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 the bank "still has a lot more work to do,"
especially in upgrading its investment bank.
On Wednesday, the SEC said Barclays improperly recommended more
expensive share classes, charged fees to clients for due diligence
and monitoring services that weren't performed and collected extra
mutual-fund sales charges and fees. Some clients also allegedly
paid excess fees to Barclays due to miscalculations and billing
errors. Much of the alleged behavior occurred between 2010 and
2015.
As part of the settlement, Barclays didn't admit or deny guilt.
A Barclays spokesman declined to comment further.
In 2015, Barclays agreed to sell its U.S. wealth and investment
management unit to Stifel Financial Corp.
Barclays will pay back $49.8 million, $13.8 million in interest,
$3.5 million to advisory clients and a $30 million penalty.
--Austen Hufford contributed to this article.
Write to Max Colchester at max.colchester@wsj.com
(END) Dow Jones Newswires
May 10, 2017 14:29 ET (18:29 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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