The new man Barclays traders are scared of
Was Tim Throsby over-promoted? It's one theory doing the rounds of London banking pundits ever since the chippy Australian packed up his cowboy boots and slightly indecent painting of a naked minotaur and left Barclays' building in Canary Wharf last week. Or did he simply fall victim to a new force at Barclays: Nigel Higgins, the incoming chairman, who is joining on 2 May?
While the first theory can't be discounted, the second is gathering steam. The Financial Times reported that Higgins' fingerprints were all over the reshuffle. The incoming chairman has reportedly been canvassing investors about activist investor Edward Bramson's strategy for shrinking the corporate and investment bank. Investors reportedly expressed concerns about sales and trading, and so Throsby was preemptively removed.
If you're in sales or trading at Barclays this does not bode well. Under Throsby, Barclays added over 50 managing directors to its markets division. It also increased the capital allocation to global markets in an effort to gain momentum and boost revenues. At the end of 2015, Barclays' corporate and investment bank had £21.8bn in average allocated tangible equity; at the end of 2018 it had £26bn. If you are Higgins and trying to increase returns, this increase looks unwarranted.
What also matters is Higgins' past and his predilections. Higgins is an investment banker: his entire 36-year career to date has been spent at Rothschild & Co, which doesn't have a markets business ("This is all you need to know," says one Barclays insider). Nor does he sound like he'd be at home on a trading floor. Bloomberg described Higgins as a 'cerebral conservative banker' who is “tactful and unassuming, yet convincing and authoritative,” and who supports the performing arts. In this sense, Higgins sounds quite different to Throsby, who reportedly swore, wore cowboy boots, and liked shocking paintings.
The real danger, though, is that Higgins will also prove very different to Barclays' CEO Jes Staley who - after all - appointed Throsby after the two men worked together at JPMorgan.
Higgins hasn't officially arrived yet and Staley appears seems to be on the back foot. The FT reported that Staley was directly responsible for unseating Throsby after Higgins expressed his concerns to Staley about the markets business. For a man that has a reputation for sticking by his friends, Staley dropped Throsby like a hot potato. Henceforth, Staley will run the corporate and investment bank himself.
Which brings us back to the question of qualifications for a role. At Barclays, Throsby was deemed out of his depth in a position that was simply too broad. "His previous biggest job was the head of equities trading at JPMorgan," notes one Barclays insider. "At Barclays, Jes made him head of the investment bank, head of the corporate bank, head of wealth management and of the U.S. consumer and payments business. He was massively under-qualified."
The worry for Barclays traders is that Higgins will reach a similar conclusion about Jes Staley himself. After all, Staley is now running a complex global corporate and investment bank with a major retail arm, even though his previous biggest jobs (not held concurrently) were as the chief executive of the individual asset management, private banking, and corporate and investment banking units at JPMorgan.
In running Barclays' corporate and investment bank, Staley is going back to what he knows. Yet it may be a position too far alongside all his other responsibilities. "Some people think Jes is out of his depth," says one Barclays insider. Higgins could yet decide the same thing. And then Barclays' trading business will really be in trouble.
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