If Jes Staley is found to be even an inch out of line in his account of his relationship with Jeffrey Epstein, he’ll be dumped by Barclays immediately. Or, more accurately, regulators will make his position untenable.
The American chief executive survived one big regulatory investigation when he was judged in 2018 to be merely incompetent (failing to show “due skill, care and diligence”), as opposed to lacking personal integrity, in trying to unmask an internal whistleblower.
But the new investigation by the Financial Conduct Authority and the Bank of England is different: it’s about whether Staley lied, or was less than frank, when describing to Barclays’ board the nature of his relationship with Epstein. Only a finding of 100% cleanliness will do.
The same applies to the board itself since it is backing Staley all the way and the regulatory inquiry also concerns the bank’s letter to the FCA setting out the chief executive’s relationship with Epstein when at JP Morgan Chase. Barclays chairman Nigel Higgins, in post for less than a year, needs a pristine regulatory outcome himself.
In other circumstances, Staley would have expected applause from shareholders for Barclays’ numbers for 2019, which showed a 25% jump in pre-tax profits to £4.4bn. The only quibble was the alert that the target of a 10% return on equity might be missed this year.
The financial performance, though, is a sideshow. For what feels like the umpteenth time, we’re waiting to see if Barclays’ boardroom is about to spit out another famous investment banker.
National energy champion to FTSE 100 relegation in five years
Centrica’s decline on Iain Conn’s watch as chief executive has been spectacular and, even in his final months in charge, the bad news outweighs the good.
The core British Gas retail division is still getting clobbered by the price cap. Weak natural gas prices are still hurting the exploration and production division. And the 20% stake in outage-prone nuclear generator British Energy is still hanging around more than a year after it was put for sale. A share price that was 280p in 2015 is now 72p and Centrica is worth a puny £4.2bn.
In truth, it was always wrong to think of Centrica as any sort of champion. The group contained too many odds and ends, which is why Conn’s strategy of concentrating on the consumer side, and adding “connected home” initiatives, made some sense.
The tragedy for shareholders is that Conn’s bet ended up as a gamble on the government staying out of the retail energy market. He lost. When the price cap arrived, Centrica’s fragile financial arithmetic couldn’t stand the strain – Conn calculates the cap cost the group £300m last year. The company found itself locked into countless rounds of job cuts in a futile attempt to protect the dividend. The upstream assets are now being sold at a bad moment in the commodity cycle.
Conn is right, though, when he says Centrica’s cash flows now roughly balance after his second cut in the dividend, which is one definition of a “sustainable” business. British Gas hasn’t halted the loss of customers but it has slowed the rate substantially. And the “services and solutions” operation – which spans smart boilers, domestic storage batteries and software for electric vehicle charging – is growing rapidly; it looks a decent business to own on the way to a lower carbon future.
That, though, is for the next chief executive, when he or share is eventually appointed. In the meantime, the share price is a hostage to the prices achieved for selling the exploration assets plus the British Energy stake. As with Conn’s exit, their departure is taking ages.
Watchdog should launch investigation in to grubby ticket sales
The Competition and Markets Authority (CMA) has already warned Viagogo and StubHub to pause any integration of their businesses while it considers a probe of the two firms’ merger. Here, though, is a strong reason for the watchdog to go further and launch a full-scale investigation: this paper’s revelations about the scale of StubHub’s activities in the grubby business of reselling football tickets.
Evidence suggest about 5% of the seats for next Monday’s Chelsea versus Manchester United game have sold or advertised via StubHub, despite a law banning reselling of tickets. There are many other examples.
The CMA should take a hint. Consumers aren’t bothered about JD Sports’ takeover of Footasylum, a small deal that fascinates the boffins, but they do care about football tickets.