Well that didn’t last long, did it?
Jes Staley’s wacky endeavour to get the band back together and turn Barclays into a poor man’s JP Morgan resulted on Tuesday in the departure of group COO Jonathan Moulds after just a year in the job. I had tipped Moulds as a potential Barclays CEO to replace Antony Jenkins and the bookies were indeed showing some very good odds mid-last year. Oh well …
Moulds’ decision to leave was his own. Staley did reportedly offer him an alternative position but he opted for the door. As far as I can make out, Staley didn’t tell Moulds that he had given his job to JP Morgan Chase’s chief administrative officer Paul Compton until the public announcement of Compton’s hire was being drafted. If I’d been treated as shabbily, I’d probably have walked too.
Shell-shocked as I imagine he was at the latest developments, I’m told Moulds had, until that point, enjoyed his return to the fray in a senior banking role and among other things getting stuck into the Realpolitik of regulatory endeavour (think UK ring-fencing and US intermediate holding company). If that’s the case, we won’t have heard the last of him in the industry.
Moulds is said to enjoy the regulatory interaction that is such an integral component of banking today, and he was reported to be making good progress with UK regulators in a very positive context. You can’t say that about all bankers, and it’s kind of important. Beyond the benefits of his long industry experience, Barclays has lost Moulds’ regulatory relationships. Careless.
As for Compton, he was latterly responsible at JPMC for global ops and tech, real estate and ‘general services’ (whatever that means) and previously co-CAO of the CIB division that Staley ran and a former CFO of the investment bank (just like Barclays’ current finance director Tushar Morzaria). With Staley having also hired CS Venkatakrishnan (JPMC’s head of model risk and development and head of operational risk) as his chief risk officer a week or so ago, it’ll be just like the old days.
If only Staley had succeeded in persuading Blythe Masters to take Tom King’s job running the corporate and investment bank (telling him just before the announcement was about to go out, naturally), it would really have been just like the good old days for all of them.
I do wonder why a senior JPMC executive would want to jump ship to Barclays at this rather precarious point in time. Just as I still wonder what possessed Jeff Urwin to leave JPM for Deutsche Bank last year. Or Bill Winters to want to run Standard Chartered for that matter. But according to the announcements that Barclays shoved out, Compton is thrilled to be joining Barclays, Venkatakrishnan feels privileged. Hmmm …
Beyond those fine emotions, there must be a terrible echo at Barclays HQ. Compton noted on February 9 that the results of the steps Barclays had taken over the last few years to enhance its operating structures and become more efficient are “the strong core businesses across retail and wholesale banking in the Group today”. And he is looking forward to working with Jes and the rest of the management team to continue the progress of the business and deliver the performance Barclays’ shareholders expect.
That’s uncannily similar to what Venkatakrishnan said on February 1. “For me, Barclays, with its strong core global businesses in retail and wholesale banking, represents an exciting professional opportunity,” he said. And yep you’ve guessed it: he is also pleased to be joining Jes and his management team as they work to deliver the performance Barclays’ shareholders expect.
Ah yes, shareholders. Since news of Staley’s appointment emerged in October 2015, Barclays shares have fallen 37.5%. I have an idea, though. Compton will have oversight of ops and tech, structural reform, cost transformation, major project delivery, administration, corporate real estate services … and sourcing. Sourcing what it doesn’t say, though a clear and credible strategy for the group might be a good start!
Alas he’s not starting until May so Staley will just have to wing it on March 1 when the group’s 2015 results are revealed. In the meantime, here’s some free advice from me, Jes: hiring JP Morgan people won’t turn you into JP Morgan, no matter how much you dream.
Roll up, Roll up … and win a prize!
Beyond the gyrations at Barclays, I, like many people, have watched with some bemusement the hammering the AT1 market has rather bizarrely taken in the past week or so. It of course forced the beleaguered Deutsche Bank to issue that embarrassing assurance that it had sufficient Available Distributable Items to cover AT1 coupon payments this year and next.
It’s as odd to see such a deeply technical item go mainstream and it must be humiliating for the once-mighty Deutsche Bank to be backed into a corner by market forces. That humiliation is rising exponentially. John Cryan’s ‘rock solid’ assertion in his harried open letter on Tuesday was bad enough (and eerily similar to Tidjane Thiam’s assertion that the rout in equally beleaguered Credit Suisse shares is unjustified and the bank is stronger than ever).
But DB is going all out. We also got the purported senior debt buyback (according to the FT) to stabilise its bond levels. And German finance minister Wolfgang Schaeuble’s rather creepy statement of confidence. If anything’s a sell signal it’s a politician giving you assurances.
When the AT1 market got going a couple of years back, everyone focused on distance to write-down triggers as the key valuation metric. That concern has switched to the size and make-up of ADI buckets. But here’s the thing: disclosure standards are, in the delightfully understated words of one analyst I reached out to on this topic, “very heterogeneous”.
He said I’d have to rely on banks’ own calculations but that national legislation differs on the distributability of certain items. In other words, you can’t compare banks’ numbers like-for-like even in the eurozone, let alone the rest of Europe and elsewhere. ING and the Italian banks, for example, include the share premium account in their ADI calculations. DB doesn’t.
We need transparency. The “Opinion of the European Banking Authority on the interaction of Pillar 1, Pillar 2 and combined buffer requirements and restrictions on distributions”, published on December 16 2015, provided some clarity in this general area (specifically around the calculation of banks’ Maximum Distributable Amounts and ability to distribute as per CRD article 141).
And I’ve directly contacted around a dozen major European banks and asked them to disclose their numbers. But I’m not holding my breath. So in a rare gesture of fine generosity, IFR editor Matthew Davies has agreed to dig deep and put up a good bottle of wine as a prize (our choice … he’s not that generous).
The prize goes to the first person who sends me (keith.mullin@thomsonreuters.com) a list – which we will publish – of the US dollar equivalent ADIs of those UK, Nordic and eurozone banks with AT1s outstanding for 2016 and 2017; scheduled AT1 coupon payments; and a column of notes pointing out what items are included in the buckets.
Simple, right?
