Barclays: Cometh the hour, exit the man

For the consumer and payments business, Ashok Vaswani, the CEO of Barclays UK, is moving to be the global head. He will report directly to Barclays CEO Jes Staley and sit on the group executive committee (ExCo).

Matt Hammerstein, head of retail lending, is being lined up to replace Vaswani as CEO of Barclays UK. And in what looks like a slightly tangled reporting line, he will answer to both Vaswani and to Staley, as well as additionally to Sir Ian Cheshire, chairman of Barclays Bank UK plc.

On the CIB side, there will no longer be a single head in the style of Throsby. Instead, the heads of its three units – the corporate bank, global banking and global markets – will be elevated to the ExCo and report directly to Staley instead of to Throsby.

All of which means that while there will no longer be a Barclays International representative on the ExCo, there will be new representation for consumer and payments, corporate banking, global banking and global markets. One out, four in.

In all of this, what is striking is that Throsby was very much Staley’s man: he was the big hire that Staley was able to trumpet not long into his own tenure. They had worked together at JPMorgan.

When Staley says that Throsby ‘has made a significant contribution to the progress of Barclays International’, it doesn’t exactly sound fulsome 

It’s also worth noting that this doesn’t appear to be a purge: Staley is not throwing Throsby’s own management structure under the bus.

Joe McGrath, who Throsby promoted to the new role of global head of banking in 2017, remains in post. Stephen Dainton, whom Throsby brought in as head of equities in 2017, is being trusted to take on the role of interim head of markets while a permanent head is sought.

There is certainly some restructuring here, but perhaps not as much as Barclays is making out.

Barclays tells us that the CIB “will … see leadership changes”. But with the exception of Throsby’s departure, there are arguably none. We are told that “global banking will comprise Barclays’ advisory, DCM and ECM businesses”. It already did, and McGrath was already running it. We are told that Alistair Currie will lead Barclays’ corporate bank: he already was.

Markets is slightly the odd man out, but only because Throsby had never got around to appointing a replacement for Joe Corcoran, whom he shunted aside in 2017 when he took “interim” charge of the division himself. One of the curiosities at Barclays right now is watching one interim head replace another interim head.

Walked or pushed?

Much as Barclays doesn’t want this to look like it’s all about Throsby, it looks a lot like it is all about Throsby.

Did he walk or was he pushed? The Barclays statement arguably presents both options. First it describes the CIB businesses as reporting directly to Staley. Only after that does it say that “as a consequence” Throsby has “decided to leave”. What’s wrong with that picture?

Should we set aside any talk of deliberate streamlining? Staley has presented Throsby’s departure as exactly that, describing it as a “delayering” to bring oversight and accountability closer to him.

But it would be surprising if a move of this magnitude, resulting in the departure of a man who was Staley’s key hire, had been taken for the purpose of “delayering” just two years later.

There is a caveat here. Structurally the firm appears to make more sense now than it did before.

While Staley was at pains to praise work that Throsby had done in the international consumer business, the fact remains that the two parts of Barclays International were always odd bedfellows, and all the more so under the management of someone so closely identified with investment banking and, more particularly, markets.

While the CIB will no longer have a single dedicated head at ExCo level, that is not unique. There are firms that have a similar arrangement, with what are implicit or explicit co-heads that represent banking or markets.

Equally, it seems eminently reasonable to have the corporate bank separately represented on the executive committee.

So, in itself, the resulting structure doesn’t seem strange, but the way in which it has been communicated still raises other questions.

When Staley says that Throsby “has made a significant contribution to the progress of Barclays International”, it doesn’t exactly sound fulsome.

Criticism

Even more telling is what Staley says about the CIB specifically. The 7% return on tangible equity it clocked up in 2018 is an improvement on 2017, he notes, “but not yet where we need it to be”. What Barclays needs to achieve that, says Staley, is “a more granular execution focus on the businesses within the CIB”.

It’s surely not too much of a stretch to read that as a criticism, but there’s also no doubt two factors meant that Throsby looked thinly spread. One was a structure that saw him straddle the CIB and other international businesses – and which has now been fixed. The other was the fact that he had been managing the markets business himself.

For both those decisions, Staley himself bears ultimate responsibility, as he does for hiring Throsby in the first place. Now he has said that the changes are intended to bring accountability for the performance of the CIB “much close to me as the group CEO”.

Whether that kind of comment is intended for the ears of activist investor Edward Bramson, employees, analysts, shareholders or all of the above, Staley has now explicitly set up 2019 as a buck-stops-here year when it comes to the CIB.

He will be held to it.