December 4, 2021
  • December 4, 2021

New Barclays chief ‘Venkat’ emerges from Jes Staley’s shadow

By on November 1, 2021 0

Within weeks of Jes Staley starting as chief executive of Barclays in late 2015, he raided his former employer JPMorgan for a pair of executives whom he described as “two of the best bankers I know”.

Since then, the combustible Australian Paul Compton and quieter yet affable CS Venkatakrishnan have been vying to emerge as Staley’s successor.

On Monday morning, Barclays announced that Venkatakrishnan — or “Venkat”, as he is known — had won the contest following Staley’s decision to step down in the wake of a regulatory investigation into how he characterised his relationship with disgraced financier and sex offender Jeffrey Epstein.

The appointment of Venkatakrishnan, who has so far shunned the limelight, will mark a departure for Barclays, whose reputation has been damaged by Staley’s association with Epstein and his attempts to uncover a whistleblower, which brought regulatory censure.

“He has a very different style to Jes, not pretending to be everyone’s best mate,” said a former top manager at Barclays of Venkatakrishnan.

Despite his popularity with staff, Indian-born Venkatakrishnan was the surprise victor in the succession race, with some colleagues pointing out his lack of experience running a large organisation. He has yet to receive regulatory approval for his sudden appointment.

New chief CS Venkatakrishnan wrote in a memo to staff: ‘The strategy we have in place is the right one, and we will continue our existing plans to transform our organisation and build on our financial prowess’

Compton had been viewed as Staley’s heir by the board, according to people familiar with their thinking. The former chief operating officer was also Staley’s preferred choice. But Staley’s judgment of character has been called into question over the Epstein affair and Venkatakrishnan’s stock has risen.

In an announcement to the stock market on Monday, Barclays said the board had identified Venkatakrishnan as the preferred candidate more than a year ago.

Born in the city of Mysore in the state of Karnataka on the south-west coast of India, Venkatakrishnan studied at Massachusetts Institute of Technology, where he gained a PhD in operations research, before joining JPMorgan in 1994.

Throughout his more than two decades at the US bank he held senior positions across its asset management business, investment bank and in its risk management division.

By February 2012, he was head of JPMorgan’s model risk group and his team’s warning system highlighted the group was exposed to a yearly loss of up to $6.3bn from a huge derivatives trade carried out by an individual who would later be known as the London Whale.

At the time, the bank’s top risk executive Peter Weiland emailed a trader, calling the size of the estimate “garbage”. But Venkatakrishnan, who is now in his mid-fifties, defended the model. A US Senate investigation later said the bank would have limited its losses if it had heeded the warning.

A senior Barclays executive who knows Venkatakrishnan well said the London Whale incident highlighted his “multi-dimensional” and “practical” approach to managing risk. “He doesn’t resile from making decisions, he will make the call and doesn’t prevaricate,” he said.

“He just sees all the angles, he has not got the tunnel vision sometimes common in risk officers.”

Venkatakrishnan was in the running to become JPMorgan’s chief finance officer when Marianne Lake was handed the role in 2013. A colleague from that time described him as “super, super, super smart” but lacking in charisma.

Staley brought Venkatakrishnan into Barclays as chief risk officer and his first move was to order a comprehensive review of the bank’s exposure to bad credit card debt. The review led to Barclays taking a £320m impairment charge after Venkatakrishnan urged the bank to adopt a more conservative approach to predicting how much of its credit card book would not be paid off.

Last year Barclays gave the clearest signal to the outside world that Venkatakrishnan and Compton were the two internal front-runners to succeed Staley.

The pair were given senior roles managing the group’s investment bank, with Venkatakrishnan becoming global head of markets, overseeing the trading operations, and Compton being promoted to global head of banking, managing the other half of the investment bank, which includes M&A advisory and capital markets.

At the time, a bank insider told the Financial Times that the promotions were designed for both men to “prove their mettle” in revenue-generating roles over the next few years.

Staley’s decision to champion the investment bank had brought criticism, notably from activist investor Edward Bramson, who waged a three-year campaign against the bank and its chief.

But the strategy appeared to pay off over the past year, as Barclays’ investment bank proved a profits engine throughout the pandemic, even if shares are still down 13 per cent since Staley took over.

Venkatakrishnan’s markets division had provided the lion’s share of the investment bank revenues, but fees from Compton’s capital markets and M&A side of the business were the bright spots in Barclays’ most recent quarterly results last month.

One top 10 shareholder said they expected little change in strategy. “The incoming CEO has been present in quite a lot of meetings,” he said. “From a corporate succession point of view, it appears to be well managed and anticipated.”

In a memo sent to staff on Monday morning after his elevation, Venkatakrishnan stressed continuity. “The strategy we have in place is the right one, and we will continue our existing plans to transform our organisation and build on our financial prowess,” he wrote.

Yet one former Barclays executive said Venkatakrishnan faced the same tough questions as Staley when it came to the bank’s future. “How does he get the valuation up, how does he win over sceptical investors, what are his strategic options from here? Is he smart enough to figure that out?”

He added: “Venkat is a good appointment, but he will need to define what his leadership at Barclays is and what his bank will look like. He can’t just be farming Jes’s strategy.”

Additional reporting by Joshua Franklin in New York


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