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Paul Compton cannot hurt Barclays' investment bank now

It is probably significant that the page on Barclays' website which explains the job currently held by Paul Compton no longer works. Yesterday, Compton was in charge of Barclays' investment bank, a role he'd held since he was appointed by Venkat when he became CEO in 2021. Today, Compton is a 404.

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Compton is not actually leaving Barclays, but he is taking the kind of job that implies he might be leaving in the next year or so. He's gone from running the investment bank to becoming 'chair of investment banking' and reporting directly to Venkat. Barclays didn't respond to a request to clarify what this entails, but it sounds less storied than running the investment bank and not dissimilar to the kind of advisory role taken by executives before they retire. 

Compton's relegation is a good sign for anyone at Barclays who feared their job being washed away in a tide of cost-cutting. An old protégé of Jes Staley, Compton has an operational background which has long inclined him towards efficiencies over expansion.

Compton joined Barclays from JPMorgan in 2016 and promptly clashed with then head of the investment bank Tim Throsby over Throsby's ambitious growth targets. Throsby set about adding 30 managing directors to the investment bank (M&A and equity and debt capital markets) and 50 to the markets division. However, when Throsby left Barclays in 2019, sources at the bank said it was because he'd been vanquished by Compton's cost-control ethos: “Paul Compton’s mantra is that net-net, any investment spend needs to come from savings,” one recently ex-Barclays MD told us at the time. “He’s the power there, he won the cost-cutting argument against Tim Throsby.” 

Compton never got to enact giant job cuts in the investment bank. But throughout the years that Barclays was stalked by activist investor Edward Bramson, there was always a risk that the stars would align and the closure of entire divisions would take place. Similarly, when Compton got to run the investment bank in 2019 there was a danger that the COO in him would trim swathes of the front office. 

That didn't happen. Short of a few underperforming managing directors and a few ostensibly underperforming juniors, Compton didn't make that many cuts. Nor are the cuts Barclays' announced today as bad as they might have been: £188m of headcount costs are being taken out of the investment bank, a drop in the ocean of the £7.6bn of operating costs in the unit last year, of which around £3.5k are likely to be compensation. The implication is that 7.5% is being shaved from the investment bank wage bill. With a return on equity of just 7% last year, it could have been much, much worse. 

Some of Compton's actions are enduring though. The Wall Street Journal reported that it was Compton who appointed ex-Credit Suisse banker Cathal Deasy and ex-Morgan Stanley banker Taylor Wright as heads of the investment bank while Venkat was being treated for cancer. As head of the investment bank it was also Compton who, allegedly, reneged on verbal promises to pay guaranteed bonuses to many of Barclays' existing managing directors (MDs). In combination, those actions led to an exodus of Barclays' managing directors for UBS and elsewhere. 

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AUTHORSarah Butcher Global Editor
  • Ja
    James Wharf
    21 February 2024

    If the new strategy will (very likely) succeed, this guy would have been the issue all along.

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