Finance

Lionel Laurent is a Bloomberg Gadfly columnist covering finance and markets. He previously worked at Reuters and Forbes.

Want a top job at Barclays? Having the right shoes and the right tie may help get you in the door, as some have theorized, but nothing quite seals the deal like having JPMorgan Chase on your CV.

The latest refugee from Jamie Dimon's fortress is Tim Throsby, who is set to quit his role as head of equities to take charge of Barclays' corporate and international business. The role will give him control not just of the investment bank but also the wealth management and credit-card businesses. It's a big jump.

His arrival will swell the ranks of the already-impressive Barclays chapter of the JPMorgan Alumni Club -- and likely raise eyebrows from staff and shareholders in the process, who will wonder why internal talent seems so thin on the ground.

Barclays CEO Jes Staley himself spent more than three decades at the U.S. bank and has wasted little time this year surrounding himself with ex-colleagues such as Chief Risk Officer C.S. "Venkat" Venkatakrishnan and Chief Operating Officer Paul Compton. Is this an old boys' network or the best that banking has to offer?

It's tough to blame Staley for hunting on fertile ground. At a time when European banks are grasping for new ideas to close the profit gap with their U.S. peers, JPMorgan offers a big and lucrative talent pool and appears to have managed its reputational blemishes (such as that 2012 whale-sized trading loss).

Returns Gap
Return on equity for European investment banks including Barclays lags top U.S. peers
Source: Bloomberg data

The bank may also be ripe for poachers given that Jamie Dimon has been head for over a decade, with no sign of stepping down.

And it's not just Barclays knocking at the door. Standard Chartered last year poached another alumnus, Bill Winters, who until 2009 was Staley's predecessor at the helm of JPMorgan's investment bank.

But as useful as it may be for European banks to target quality talent on Wall Street, it's also right to question whether Barclays' top management team will be sufficiently diverse or balanced at a time when banks are struggling to find new ways to boost profits, bolster balance sheets and improve staff morale.

Lack of Faith
Barclays is among the region's lenders trading at a discount to JPMorgan's book value despite turnaround hopes
Source: Bloomberg data

Unlike JPMorgan -- which dominates the investment-bank league tables, generates above-average returns and is able to return more cash to shareholders while also meeting regulatory requirements -- Barclays is a global laggard struggling to overhaul itself in the face of falling revenues, potential Brexit uncertainty and more onerous capital requirements. The U.K. bank trades at a hefty discount to book value, while JPMorgan trades at a premium.

It's true that an equities banker like Throsby has useful experience in cutting costs and investing in technology. But Barclays' challenges are complex and go beyond cutting pay and headcount. The bank has 46.7 billion pounds ($62.2 billion) in "non-core" assets that it's trying to get rid of. It's trying to sell its African business. It's highly exposed to the U.K. economy -- with Britain accounting for over half of all revenues -- which has yet to feel the full brunt of the Brexit vote. Shareholders' patience is being tested with a two-year dividend cut.

Turnaround Needed
Barclays shares have struggled to close the gap with European peers
Source: Bloomberg

Investors will want to be sure that Staley's new team can turn the bank around -- but "more of the same" won't cut it either. Staley need lieutenants who will challenge him. He has clearly called on qualified people he trusts, which makes sense, but if the "Jes Men" become "Yes Men" that won't be a good thing.

Barclays is about to find out what that JPMorgan halo is really worth.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Lionel Laurent in London at llaurent2@bloomberg.net

To contact the editor responsible for this story:
Jennifer Ryan at jryan13@bloomberg.net