Barclays’ investment bankers have had a good time of it since the departure of their previous ex-retailing banking CEO Antony Jenkins and Jenkins’ replacement by Jes Staley, a red-blooded ex-J.P. Morgan man with a trading bent, but all this fun could all be about to come to an end. As Patrick Jenkins points out in the Financial Times, Staley’s judgement is now due.
The judgement in question relates to the UK Financial Conduct Authority’s investigation into Staley’s misguided attempt to unearth the identity of a whistleblower earlier this year. To be reached by Andrew Bailey. the FCA’s “firm but fair” chief executive, the judgement has the potential to unseat Staley and give Barclays its fourth chief executive in just five years. The outcome matters for both men: Bailey could succeed Mark Carney at the Bank of England and may be looked upon unfavourably if he’s seen as too easy on Jes; if it goes badly, Jes may decide to go back to America and his artisan crafted boat.
People working in Barclays’ investment bank should view the upcoming judgement with trepidation. If Jes is exonerated, their Christmases will be merry and the plan for returning Barclays to its former risk-taking glory will proceed as intended. If Jes is jilted, there’s a risk that Barclays will undergo yet another change of strategy under a boss less amenable to the investment bank. If so, it would come at a bad time: the return on equity in the investment bank was just 5.9% in the third quarter, well below the cost of capital. Staley intends to grow his way out of this; another CEO could just as easily decide to cut. The only upside is that Barclays’ share price, down 13% this year, is expected to rise if Staley goes. This could benefit anyone with deferred bonuses, although Barclays cut deferrals last year – so even this slender benefit could well be negligible.
Separately, people ask for some strange things when they move to Paris. The New York Times has been looking at how the city of light is changing in its attempt to woo post-Brexit bankers. The contortions include a room in the French finance industry which has been bedecked to look like a start-up and includes a sign saying, “On your mark, get ready, innovate!” There’s also an agency you can call when you’re an international company pondering your move. Someone called it and asked where the executive “dancing clubs” (““Kind of a social club for executives and their wives.”) One was unearthed in Western Paris.
Goldman Sachs is having tea and biscuits with John McDonnell of the UK’s Labour party. (Bloomberg)
The easy life is over on the buy-side. In 2018 people will be asked to do more for less. (Business Insider)
Oxford researcher says artificial intelligence is a speculative bubble. (BFM Business, in French)
How to develop an AI stock picker: “If you partition the problem into two steps – predicting future fundamentals from historical fundamentals, and then use those future fundamentals to predict price – the complexity of deep learning can be made useful and improve the model.” (Bloomberg)
There’s an expectation that mothers won’t work in Frankfurt. (Financial Times)
Former British brokers in Luxembourg have opened a shop selling Marmite and British goods to coming Brexit hordes. (Bloomberg)
One senior executive at a large US institution said he had privately told the UK government that if it “pulled a rabbit out of a hat 10 minutes before midnight” on March 31 2019, then banks including his would reverse their decisions to leave the UK. (Financial Times)
As a possible prelude to the Bank of England moving from London Birmingham, Mark Carney spent a day in Liverpool last month. (Bloomberg)
HSBC struggled to hire 1,000 people in Birmingham, despite offering all kinds of sweeteners to get staff to move there. (BreakingViews)
Citi’s investment bankers are on a roll. (Business Insider)
Blockchain company raises $42.5bn in just two weeks. (Business Insider)
Bankers work more than 40 hours a week to justify themselves to their employer. (Financial News)
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