Staley: Barclays Must Finish Investment Bank Repositioning

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Canary Wharf - Barclays Tower
London, UK - July 1, 2014: Evening close up of the top of the very tall office block used by Barclays Bank with their logo overlooking Canary Wharf and Docklands in the East of London.

The new CEO of Barclays Plc., Jes Staley, immediately let his vision for the investment bank’s repositioning be known following the announcement that he was CEO. Staley, who will be paid 8.25 million pounds a year, pledges to shrink the division and restore the bank’s relationship with regulators.

Barclays has paid billions of pounds in misconduct fines in the past.

The goal of the company is to transform into a less capital intensive model. There will be a cultural transformation within the company, according to the new CEO. Staley reaffirms that the bank needs to conduct itself with the utmost integrity at all times.

A 34 year veteran in the banking industry, Staley, just 58 years old, worked for J.P. Morgan Chase and Co. for most of his career. He worked for J.P. Morgan as the head of the company’s investment bank, and hopes to bring this experience to Barclays.

In a memo sent to company employees, the CEO states that shareholders have been more than patient and now is the time for the bank to generate attractive returns and turn around its operations.

Following the announcement of Staley being brought in as CEO, company stock dropped 3% between October 12 and October 28, 2015. The company’s stock has continued to slide into early November, and is down 1% on the day as of November 3, 2015.

A major concern among investors is that the company’s securities unit continues to struggle despite bringing in one third of the bank’s total revenue. The unit is plagued with surging litigation costs that have lessened the confidence of investors in the company. In 2014, the unit had just a 2.7% return.

Staley has a huge challenge ahead of him because the investment sector the bank brings in a lot of growth. Reforming the culture of the bank and cutting back on costs will be a difficult job as he needs to assimilate into the company and be respected by his peers.

While with J.P. Morgan, there are rumors that Staley was a candidate to become CEO of the company. A wealth of experience will allow the company to grow strategically and deliver shareholder value in the future. The repositioning of the securities unit will be a challenging matter. Barclays is one of the leading financial institutes in the entire world, and change will need to occur incrementally for true value to be made in the company.

Staley has stated that it’s time to have a working relationship with regulators and spend less time preparing for a financial crisis like in 2008.

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