Jes Staley, the CEO of Barclays bank has stepped down over allegations that he attempted to identify a whistleblower. The company is currently being investigated by the Financial Conduct Authority and other regulatory bodies for their role in the 2008 financial crisis. Jes Staley was appointed as chief executive officer after previously working at JPMorgan Chase, but this latest incident will see him step down from his position with immediate effect.
The allegations are that Staley attempted to identify the author of two letters which raised concerns about a senior employee that was being considered for a position within the company. The whistleblower alleged that Mr Staley had not followed procedure, but it is reported by Reuters news agency that he (Mr Staley) honestly, but mistakenly, believed that it was his duty to find out who wrote the letters.
The company stated in a memo that Mr Staley had admitted his mistake when discovered , apologised and accepted he will have to relinquish his position as CEO. An internal investigation is in progress at this time with another board member, Sir Michael Rake, assuming the role of non-executive chairman until a suitable replacement has been found.
Sir Michael Rake is already chair of the bank’s remuneration committee, having previously served as chairman for insurance firm BT Group. This latest incident isn’t likely to play well with Barclays’ shareholders who are continuing to express their discontent over the pay of senior executives in the company .
Jes Staley’s previous position at JP Morgan had him working in senior management positions within the investment bank and this saw his pay rise to $16.2 million (on average) between 2012 and 2015 prior to taking on his role as Barclays’ CEO. This makes him one of the highest paid executives in the finance industry, but his actions have come under scrutiny leading to him relinquishing his current position.
According to Reuters, the Financial Conduct Authority and Prudential Regulation Authority were already looking into Barclays relationship with Qatar Holding and Qatar National Bank in 2016 , but this latest incident has only fuelled the fire. Mr Staley is said to have been trying to identify who had leaked information about a $3 billion Qatar investment that was planned by the bank.
The majority of Barclays time in the public’s eye has been due to all of their wrongdoings, but this latest incident is one of many which will continue until they address their behaviour and start actually adhering to ethics and compliance . It may seem like a harsh thing to say given the severity of the topic, but these people will only get away with it if there’s no proper punishment for their crimes.
Financial institutions have been bringing business down for a long time now and each time they think that they can simply pay off authorities to avoid any serious consequences. One of the banks that has been severely affected by this is Deutsche Bank which was hit with a $630 million fine just last year due to their role in manipulating benchmark rates.
The Financial Conduct Authority fined Deutsche Bank the equivalent of nearly £500 million for serious misconduct over the manipulation of interbank lending rates which are used as key benchmarks throughout global financial markets. The FCA took action against the bank after they admitted wrongdoing in a settlement with US and UK authorities back in 2015 in a deal that saw them pay out around $2.5 billion in total.
One of the major problems with these fines is that they don’t really hit the banks hard enough to change their behaviour. The bank’s shareholders actually get hit much harder than its employees by means of share price drops which can be seen as nothing more than a cost of doing business at this point.
Until they hit them where it hurts (their funding) then these institutions will continue finding ways to scam the system and make money through illegal means.