Barclays CEO Awaiting First Meeting With Activist BramsonBy and
Staley says share buybacks will start once misconduct settled
CEO remains committed to investment bank despite poor returns
Barclays Plc Chief Executive Officer Jes Staley said he’s still waiting to hear the views of the bank’s new activist investor, while pointing to the potential for buybacks that Edward Bramson and other shareholders might be craving.
The London-based bank’s head of investor relations has already “had a brief meeting” with Bramson’s Sherborne Investors, Staley said on Bloomberg Television, his first interview since the firm emerged this week as one of Barclays’s biggest owners. The CEO reiterated the lender will be in a position to return more cash to shareholders as soon as legacy misconduct issues are resolved.
“We look forward to hearing what his thoughts are,” Staley said Wednesday, adding that Bramson hasn’t said anything about the bank’s strategy. “Any major investor, be it Capital Group or Tiger Global, that has a shareholding of this size clearly is keenly interested in what the bank is doing, and we look forward to articulating what our vision is for the bank and hearing what they think about it.”
Pressure on the CEO increased this week after Bramson acquired 5.2 percent of the voting rights in the British bank, with the aim of pushing for strategic change to lift the shares, a person familiar with the matter has said. Staley, a former JPMorgan Chase & Co. executive, has bet his reputation on boosting returns and overhauling the investment bank, which is Barclays’s worst-performing division.
“We are very committed to our investment bank,” Staley said when asked what investors think of the unit’s performance, citing merger advisory mandates and big bond deals the firm has won recently. “We like the progress that we are making,” but “we get questions, and obviously we are going to have to answer those.”
U.S. asset manager Capital Group Inc. is Barclays largest shareholder, with 7.1 percent of the shares, while Tiger Global Management, the hedge-fund firm run by Chase Coleman, acquired a $1 billion stake in November.
Before Barclays can consider buybacks, it must first resolve a legal battle with the U.S. Department of Justice over the pre-crisis sale of toxic mortgage bonds, Staley said. The DOJ sued Barclays for fraud in December 2016 after the bank refused to pay the amount the government sought. At the time, people familiar with the situation said the lender was willing to pay no more than $2 billion to settle. The two sides revived discussions about reaching an out-of-court settlement last October, Bloomberg News reported.
Staley, 61, is also awaiting the outcome of a U.K. Financial Conduct Authority probe that could determine his future at the lender after he repeatedly attempted to unmask a whistle-blower. In 2017, Barclays’s board found that Staley “honestly, but mistakenly, believed” he was permitted to try to reveal the identity of a person expressing concerns about a bank executive. Staley declined to comment on when he expects a resolution.
Last month, Barclays said it will return its dividend to previous levels, and consider stock buybacks for the first time in more than 20 years, as its capital buffer rose in excess of its target. Revenue from its markets unit, which trades stocks, bonds and currencies, also fell less than expected and that of its Wall Street peers.
The dividend boost, which will restore the payout that Staley cut in 2016, is a sign executives are confident the bank’s slimmed-down balance sheet has enough capital to survive another crisis and settle some remaining misconduct issues.
Staley said lawmakers in the U.K. and Europe should pay close attention to President Donald Trump’s tax cuts and promised softening of banking regulation, which indicate the U.S. is “very actively trying to make the environment as business-friendly as possible.” The “dramatic” corporate tax cut will boost Barclays’s earnings in the U.S., where it does about 40 percent of its business, he said.
Barclays stock is down about 7 percent in the past 12 months, trailing the 1 percent gain by the Bloomberg Europe Bank and Financial Services Index.
“We are on course to deliver what we promised shareholders in March 2016,” the CEO said, referring to when he laid out his strategic vision. “Returning excess capital to our shareholders is what we have to be focused on doing.”