ALEX BRUMMER: Jes Staley leaves the Barclays stain
Punished: Jes Staley
Jes Staley deserves to be punished for misleading the board of Barclays and the City’s Financial Conduct Authority (FCA) about her relationship with sex offender Jeffrey Epstein.
As well as being fined £1.8m and banned from taking a senior role in financial services, he will lose £17.8m in deferred payment pending at the bank.
Not being honest with the Barclays board is bad enough. But his friendly relationship with Epstein, including visits to the latter’s luxurious lair in the US Virgin Islands, shows a despicable side to his character, which he kept secret as CEO of Barclays from 2015 to 2021.
Staley still appears to deny it despite a comprehensive email trail that emerged from the legal case brought by the US Virgin Islands against JP Morgan (and now settled). He has appealed to the FCA’s high court and argues that, if he had known who Epstein “really” was, he would not have kept in touch.
What is difficult to understand is the lack of action by the Barclays board and, in particular, successive chairmen as a terrible scandal unfolded.
John McFarlane, the enthusiastic chairman of Barclays when Staley was chosen, felt he had snagged a real star. The bank sought to maintain its role as an investment banking powerhouse and Staley, with his experience at JP Morgan, fit the bill.
In his enthusiasm, McFarlane appears to have obtained only the most peremptory references from JP Morgan’s top brass.
Had more detailed conversations and investigations been conducted, red flags may have been raised. The appointment was good for Barclays as it allowed it to restore its status as one of Europe’s leading investment banks.
The financial performance was strong enough to defeat efforts by New York-based activist Ed Bramson to force Barclays out of investment banking.
The Barclays board, first under McFarlane and later under the leadership of former Rothschild grandee Nigel Higgins, took at face value Staley’s “reckless” claims that there was no impropriety in her relationship with Epstein and did not investigate further.
Independent chairmen and non-executive directors are there to protect the interests of all stakeholders. For the board to simply send a letter to the regulator containing half-truths, without seeking external verification, is extraordinary.
For senior appointments, one would expect boards to be extremely cautious and gather all available information.
Barclays failed in this task and it is not just Staley who deserves retribution.
voice of reason
Groupthink is easy and being the dissenting voice can throw you into the outer darkness.
As chief economist at the Bank of England, Andy Haldane often found himself on the wrong side of a monetary policy committee (MPC), where former Treasury mandarins have been dominant voices.
Haldane now has a new pulpit from which he can speak at the Royal Society of Arts. The MPC’s new questioning voice is London School of Economics assistant professor Swati Dhingra.
In an interview with the BBC, he explains why, since joining the MPC in the summer of 2022, he has voted against increases in the Bank’s base rate on nine occasions.
Regular readers of the MPC minutes will not be surprised that she decides not to side with the anti-inflation zealots.
The economy is already stagnating. The 0.2 percent recovery in output in August, backed by the strength of the services sector, keeps hopes alive of avoiding a recession.
However, as Dhingra notes, only about “20 to 25 percent of the impact of rate hikes” have materialized. Monetary policy takes time to work.
Last month, the Bank suspended the interest rate at 5.25 percent. Going further will only cause undeserved pain to mortgage borrowers, tenants and the vulnerable.
Finally, a breakthrough has been made in Marrakesh. China’s Exim Bank has agreed to guarantee $4.2bn (£3.4bn) of its $7bn (£5.7bn) of debt held by Sri Lanka.
Other creditors are yet to come on board, but Beijing’s willingness to play along should encourage the International Monetary Fund to release $334m (£274m) of assistance.
China will have calculated that by showing flexibility it can open the way to gaining support for greater voting power in the fund should new financing be agreed, by increasing the IMF’s capital (known as quotas).
Hope lives eternally.