Barclays Revamp Puts Staley’s JPMorgan Cohort in Spotlight

(Bloomberg) -- Barclays Plc’s leadership reshuffle puts two of the likely internal contenders to replace Jes Staley in the spotlight. The pair, who will together lead the investment bank, inherit a daunting task.

Chief Risk Officer C.S. Venkatakrishnan, known as Venkat, will head markets while Paul Compton will oversee banking operations. They are charged with executing Staley’s vision of sustaining a global investment bank while reining in costs amid economic turmoil and a global pandemic. Barclays shares, like other lenders, have slumped this year and are down 45% through Thursday.

The revamp raises the profile of the duo at a time when analysts and investors are speculating about who will be Staley’s successor.

“The management changes suggest that succession plans are a significant agenda item from a board perspective,” said John Cronin, an analyst at Goodbody. “There has been plenty of speculation over the last year on Staley’s longevity and I feel it is only a matter of time before there is an announcement in this respect.”

In July, Bloomberg News reported that an executive search firm had been tapped to reach out to potential candidates as part of a long-term succession plan. While Barclays said there was no search underway, people with knowledge of the matter have said Staley, who became CEO in December 2015, could leave the bank as soon as next year.

The changes are “designed to develop what is an already exceptional senior leadership team for this bank,” Staley said in his memo. A spokesman for Barclays declined to comment.

Staley Recruits

Venkatakrishnan, 54, and Compton, 56, were both recruited by Staley from JPMorgan Chase & Co. in New York where they both spent about two decades. The American chief executive officer brought them in shortly after taking charge, as part of his mandate to revamp Barclays’ profit growth. Both Venkatakrishnan and Compton have being working closely with Staley since then.

Venkatakrishnan, who replaces Stephen Dainton, comes from Mysore, a city in southern India. He spent more than 20 years at JPMorgan, joining the Wall Street bank after completing a PhD in operations research from the Massachusetts Institute of Technology. His 1991 dissertation was on the analysis and optimization of terminal area air traffic control operations. During his career at JPMorgan, roles included a stint as head of model risk and development.

“Perhaps the fact that he is not from a trading background will mean he is a little more open-minded about potential future strategy and will not be afraid to break with the past,” said Gary Greenwood, analyst at Shore Capital. “His role as chief risk officer has allowed him to take a deep dive into all aspects of the group’s operations.”

Labyrinthine IT

Compton, an Australian, became president of the corporate and investment bank last year, following the abrupt ouster of Tim Throsby. He started his career at EY before joining JPMorgan in 1997.

As chief administrative officer at JPMorgan, he was steeped in the mechanics of banking infrastructure, including the labyrinthine information technology systems that control everything including settling derivatives trades and dispensing cash from ATMs.

Compton, who replaces Joe McGrath, has been Staley’s right hand at the British bank since he joined in 2016. Staley brought him in as chief operating officer with responsibility for technology. He “is one of the best bankers I know in the industry,” Staley said after appointing him.

With a focus on cost and technology, Compton has shown a hands-on approach in managing the British lender’s securities unit, people who have worked with him said. He supported Staley in taking the unpopular decision of cutting bonuses at the investment bank to hit targets on returns last year.

More difficult decisions likely lie ahead.

The bank’s continuing embrace of the capital markets runs counter to the retrenchment many of its European rivals have undergone since the 2008 crash. The approach has been criticized by activist Edward Bramson, who has a position of about 6% in the 330-year-old lender.

While Staley’s strategy has been somewhat vindicated after trading revenue surged during the pandemic, he’s already said that revenue at the corporate and investment bank might see a “moderation” compared to the first half of the year. Some expect the securities unit to shrink.

“My own view is that they will indeed look to reduce the risk profile and drive down costs at the investment bank,” said Goodbody’s Cronin.

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