Double trouble for Staley
JES Staley is the most impressive figure to occupy the top job at Barclays for a long stretch. He has a clear-eyed view of the future direction of the bank.
His flaw is incredible loyalty to former colleagues and family in a post-crisis era when bankers’ behaviour is under scrutiny. Staley was embarrassed last month when it was revealed the Barclays chief executive was being probed on both sides of the Atlantic after he sought to identify a whistleblower seeking to undermine a key appointment from his former stable at JPMorgan.
Now he has a second problem. The Wall Street Journal reveals Staley finds himself at odds with one of Barclays biggest clients KKR after being pressed into involvement in a business dispute between the private equity giant and his brother-in-law Jorge Nitzan.
Nitzan and his sister Debora Nitzan Staley sold their interest in Brazilian data-centre company Aceco to KKR in 2014 as part of a deal valued at $700m. As Brazil’s economy fell into the deepest and longest recession in its history, Aceco and the real, the Brazilian currency, plummeted, the firm imploded and KKR began a campaign to recover its money. It is reported Staley sought to remedy matters for Nitzan by identifying a possible investor, Tim Collins of New York’s Ripplewood Advisors. He also discussed the matter with two of KKR’s coinvestors at their instigation. KKR allegedly has sought to pressure Staley to intervene with his brother-in-law (who has since acquired Aceco’s debt) and moved some business away from Barclays.
The private equity giant looks to be using strong-arm tactics to compromise Staley.
In both cases the motive of the Barclays boss were honourable, in that he was acting in the best interests of friends and family.
In the free-wheeling world of New York investment banking from whence Staley emerged, such freelance conversations may be entirely appropriate. But Staley is no longer part of that. Barclays may own a profitable investment bank but it is a global commercial bank and even the whiff of a conflict is unsettling. Staley does not fully appear to have understood the boundaries which come with the job. It would be a pity if his perceived lapses of judgement were to damage his reputation and cost Barclays a respected chief executive.
Campaign boost
THERE is no escaping the facts. The early draft of the first quarter output numbers was disappointing coming after a buoyant last three months of 2016 and an upgrade for Britain from the International Monetary Fund. But the speed with which Brexit critics latched onto this as a sign that the postreferendum expansion was shuddering to halt is exasperating.
It has always been the case that at some point, after last year’s depreciation in the pound, manufacturing would take up some of the slack from the consumer. The April manufacturing purchasing managers index points to this happening. It surged to 57.3 from 54.2 and orders are up too. Although first quarter GDP was weaker than expected, these numbers were far stronger than predicted. The depreciation of sterling means that British exports are doing well globally and in the European Union as it wakes up from a long slumber. There will be capacity constraints, but what we are starting to see is the positive upturn for manufacturing and exports seen after past depreciations in the pound. The improved outlook will not be confined to manufacturing. Making things requires all manner of services, ranging from transport to IT, and extra revenues that should feed back into the economy.
One upbeat data set does not mean anyone can rest on their laurels. It is nevertheless something for Theresa May and the Tories to work with on the campaign trail.
Astra lift
ASTRAZENECA has tested the patience of investors since it repelled the unwanted approach of serial pharma takeover specialist Pfizer in 2014. Finally, then, some cheer for shareholders with the US approval for its immunotherapy bladder cancer drug Imfinzi in the US. It could be an important step towards the lung cancer blockbuster when used in combination with other therapies. Could be the breakthrough patients and investors yearn for.
Undeserved rewards
A QUESTION for Aberdeen and Standard Life investors. Why should there be a shared pot of £35m of retention bonuses to retain key investment managers when Aberdeen is still seeing outflows from its totemic emerging market funds? Only asking.