Barclays New CEO Signals Return to Banking Roots

A renewed emphasis on investment banking is a promising, if risky, move for Barclays say equity analysts. Barclays has a strong retail and commercial banking business in the UK

Erin Davis 13 October, 2015 | 2:00PM
Facebook Twitter LinkedIn

We think that the news that Barclays (BARC) is planning to appoint Jes Staley as CEO is a strong signal that Barclays is going to return to its universal bank roots – maintaining a strong investment bank – rather than follow in the footsteps of other European banks which have shifted to focus on retail and commercial banking. Staley has deep roots in investment banking, having led the investment bank at JPMorgan during his 30-year career there.

The risk of this move should not be understated

Most recently, he spent two years at Blue Mountain Capital, a U.S. hedge fund, after leaving JPMorgan in the wake of a power struggle. Staley's appointment is expected to be announced formally in the next two weeks, once it has been approved by regulators. We plan to maintain our £3.20 fair value estimate and no-moat rating for the bank.

We think that a renewed emphasis on investment banking is a promising, if risky, move for Barclays. On one hand, it's surprising, as Barclays has a strong retail and commercial banking business in the U.K. which would be an obvious choice for a likely successful, if middling strategy. We typically have seen a focus on investment banking from banks like Deutsche Bank, that have been less successful in other businesses – the German retail banking market suffers excess supply, for example – and have fewer good cards to play.

SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk

To view this article, become a Morningstar Basic member.

Register For Free

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Facebook Twitter LinkedIn

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Barclays PLC199.46 GBX-1.65Rating

About Author

Erin Davis  is a senior banking analyst for Morningstar.