Jes Staley’s Jeffrey Epstein issue is just the latest Barclays tangle

Here’s why running this particular British bank is like riding a rollercoaster

The writer is author of ‘The Bank That Lived a Little: Barclays in the Age of the Very Free Market’

What is it about Barclays? This accident-prone British bank is a long-term underperformer — its share price is down 75 per cent from its 2007 peak — and plagued by frequent, rapid changes of chief executive.

Is there a rational explanation for this or is it simply down to bad luck? These questions have returned to the fore now that Barclays has revealed that its current leader, Jes Staley, is under investigation by UK regulators over his “characterisation” of his relationship with disgraced US financier Jeffrey Epstein, who committed suicide while awaiting trial on sex-trafficking charges.

History shows that becoming CEO of Barclays is like getting on a rollercoaster. Few of the bank’s chief executives have had a smooth ride and for most the ride has ended early. This remarkable story requires explanation.

Barclays did not formally have a chief executive until 1992, before that it was headed by an executive chairman. Nine men — and no women — have held the position of CEO. The boards who appointed them have made some spectacular about turns, beginning with the very first chief, Andrew Buxton. He was eased out after two years for not being radical enough. His successor, Martin Taylor, then lost the largely unchanged board’s support in 1998 for being, yes, you have guessed it, too radical.

Barclays poached Michael O’Neill from Bank of America to be Mr Taylor’s permanent successor in February 1999. But he withdrew two months later on health grounds. He went on to become a hugely successful chairman of Citigroup and in the light of Barclays’ subsequent history could be forgiven for counting his lucky stars.

The ride at Barclays has become even faster and riskier in the last 15 years. John Varley, a quietly determined Englishman whowas at the time related by marriage to one of the founding Barclays families, became CEO in 2004. He steered the bank through the first phase of the 2008 financial crisis and left of his own choosing in 2010.

There was still a sting in the tail. In 2012, the Serious Fraud Office announced it was investigating the bank’s 2008 fundraising involving Qatari investors. And Mr Varley was charged in 2017 along with three other former senior Barclays executives with fraud allegations. He was acquitted last year but it was an unpleasant codicil to his Barclays career.

Next came the hard-charging Wall Street investment banker Bob Diamond. His full-throated universal banking strategy never enjoyed the total support of the UK authorities, particularly Bank of England governor Mervyn King. During the financial crisis Mr Diamond, then leading Barclays’ investment banking arm, snatched up the US assets of Lehman Brothers out of bankruptcy.

Although regulators approved Mr Diamond’s promotion to CEO, he was there on sufferance and they bided their time.

A series of reputational issues led regulators to warn Barclays’ board about cultural failings in early 2012, and the Libor scandal proved to be the last straw. After Barclays became the first bank to admit its traders had rigged the ubiquitous interest rate, the BoE insisted Barclays get rid of Mr Diamond.

The careful British consumer banker Antony Jenkins, was much better liked by the regulators but not, it turned out, by the board which had appointed him. Dubbed “St Antony”, Mr Jenkins sought to clean up the bank’s culture and trimmed its balance sheet. But his proposals to shrink the investment bank clashed with the board’s ambitions. In 2015, he too was removed from office.

By now a pattern was emerging at the top of Barclays: Brit, Yank, Brit, Yank and the board turned next to Mr Staley. A former JPMorgan investment banker, Mr Staley argues that consumer and investment banking are countercyclical and Barclays needs both. When that strategy was challenged by activist investor Edward Bramson, shareholders backed the board and by implication Mr Staley. The bank appeared close to answering its core strategic dilemma.

But Mr Staley has other problems: Four years ago he broke all kinds of rules by trying to unmask a whistleblower and was later fined £640,000. Now authorities are asking if he misled them about his dealings with Epstein, a big client of JPMorgan’s private bank while Mr Staley was there. Authorities have received a cache of emails that suggested their relationship was friendlier than claimed by Mr Staley, who had categorised their relationship as professional. Just as Mr Diamond discovered seven years ago, Mr Staley is learning that — like the postman — the BoE always rings twice.

So what is it about Barclays? First, it is a bank and banks are notoriously difficult to manage. As a high-street brand it is closely watched by consumers, and as a FTSE 100 company it is scrutinised by fund managers. It is always in the public eye. Second, its universal banking business strategy has divided investors and at times the board. With that debate lurking in the background, controversy has never been far away. Third, Barclays has cultural issues which go way back in time, including a historic defensiveness in the face of external challenge. The current investigation into Mr Staley is also in effect an inquiry into the credibility of a board that accepted his word; there is much riding on it.