It’s disappointing Jes Staley’s exit has only happened now

The departure of Barclays CEO Jes Staley, to spend more time with his lawyers, was characterised as a “shock” in some of the media reports. It wasn’t to those who’ve been paying attention.

First the background: the bank says that on Friday it received “preliminary conclusions” from both the Financial Conduct Authority (FCA) and the Prudential Regulation Authority, which have been investigating Mr Staley’s “characterisation” of his relationship with the late Jeffrey Epstein and the “subsequent description of that relationship in Barclays’ response to the FCA” for some time.

Barclays stated that the investigation “makes no findings that Mr Staley saw, or was aware of, any of Mr Epstein’s alleged crimes”. The disgraced financier was facing a string of ugly looking allegations including the sex trafficking of minors. This was, it said, “the central question underpinning Barclays’ support for Mr Staley following the arrest of Mr Epstein in the summer of 2019”.

But that’s not really the point. The statement makes clear that the regulators think they were misled by the Barclays boss. With Mr Staley stating his intention to contest this, his role as CEO has become untenable. So he’s gone with a payoff of £2.6m, and it could turn out to be a lot more than that given that the bank is paying for his relocation back to his native US.

Barclays’ board says it is “disappointed about the outcome”. Does this apply to Mr Staley’s conduct? To the regulators? Or to the fact that they’ve all now got egg all over their faces?

Mr Staley has, it is true, been a highly effective CEO and such people are devilishly hard to find. Ian Gordon, Investec’s banking analyst, is not a man to shower undue praise on the bosses of the banks he covers. But he gives Staley a nine out of 10. There are plenty of investors who would agree with that assessment.

Staley came up with a coherent strategy for the bank, which it never seemed to find under his predecessor Antony Jenkins. The transatlantic investment bank that emerged, with a UK retail business tacked on, drew the ire of one Edward Bramson, an activist investor who wanted to break the bank up. Staley rightly decided to face him down. He has been vindicated for doing so.

True, the shares have lost ground over his tenure. But they have notably outperformed the bank’s UK listed rivals. The highly successful investment bank is a major reason and investors have lately been treated to share buybacks and an improving dividend.

Mr Staley’s record is not spotless. There are still problems to fix at the retail bank. But Barclays’ results don’t, these days, appear spattered with the red ink of “exceptional items”, and particularly exceptionally bad regulatory items, in the way that they used to. Mr Jenkins started the clean-up. Mr Staley has kept it up. It’s just a pity that, to my mind, the same cannot be said of his personal account.

The Epstein affair is not the first embarrassing regulatory entanglement he has been involved with. His earlier attempts to out a whistleblower at the bank led to a £642,000 penalty being imposed upon him by the FCA and the withholding of his £500,000 bonus.

There were many who argued that he should have gone then, and I was among them. The importance of whistleblowers in banking cannot be overstated. The muck that emerged from within the industry in the aftermath of the financial crisis required a fleet of bin lorries to cart it away. More recent events at some of Barclays’ rivals have proved that the industry has yet to fully clean up its act.

Whistleblowers are essential when it comes to shining a light on the sort of problems that seem endemic to banking and financial services generally; problems of sloppy practice, sharp practice, even fraud.

But stepping up in Britain puts the whistleblower’s reputation and livelihood at grave risk. In contrast to America, there is no financial compensation available for doing the right thing.

The FCA has repeatedly stated that it wants to encourage them. Earlier this year, it launched a campaign “in confidence, with confidence” in the hopes of encouraging people to report examples of bad practice. But how are potential whistleblowers supposed to have any confidence when Mr Staley was given what amounted to a slap on the wrist for trying to unmask one of them? The penalty – £1.1m – might look big. It is not that to a man of Mr Staley’s means.

There was a suggestion that Barclays, which was looking wobbly when the scandal broke, could have had trouble finding a decent successor. Mr Staley’s departure would have been destabilising at the very least. Hence the fine.

The trouble with that, for me, is the message it sent out across the industry. I fear the regulator, and Barclays’ board just got it wrong. And look where we are now in the wake of it. Another messy, and entirely avoidable, personal issue has engulfed Mr Staley and his employer with him.

Barclays does at least have a successor ready to parachute into the top job in the form of CS Venkatakrishnan, known as Venkat. He is another investment banker, and another alum of JP Morgan. He is also a former chief risk officer, which will doubtless please Barclays’ regulators. The process of succession planning has been going on for a while. That part of these events reflects well on the Barclays board.

It is just about the only thing that does. Ditto the regulators. Disappointing indeed.