Barclays board on the rack, says ALEX BRUMMER

What is it about Barclays? It is admirable that amid the turmoil since the financial crisis that the bank, which traces its origins to City alleyways in 1690, is keeping the flag flying. Most Continental financial groups quit investment banking as too costly and risky.

It would be extraordinary if London, as the world’s most significant foreign exchange and derivative trading centre, didn’t have a UK-domiciled bank with skin in the game.

Barclays’ determination to compete with Wall Street players Goldman Sachs, Morgan Stanley and JP Morgan is fine, and a credit to ambition when other High Street banks have become risk averse. It has also been Barclays’ downfall.

In its pursuit of investment banking, it has been a lightning rod for regulatory failings. And, for a variety of reasons, successive chairmen have found it impossible to stabilise the chief executive role.

Aussie-American James Gorman has been chief executive of Morgan Stanley since 2010. Jamie Dimon has been boss of JP Morgan since 2005 and shows no sign of stepping back. At Barclays, the story is very different. John Varley was at the helm in the financial crisis. He gave way to American Bob Diamond who was replaced by consumer banker Antony Jenkins. He made way for Jes Staley (hired from JP Morgan), succeeded by CS Venkatakrishnan, who has not enjoyed best of health.

Under the microscope: In its pursuit of investment banking, Barclays has been a lightning rod for regulatory failings

A common factor running through the revolving Barclays’ door is regulatory scrapes. Varley (together with Diamond) managed to avoid a UK government bail-out but required a series of deals with Middle-East potentates, which subsequently were challenged in the courts.

Diamond, who is the main architect of the current investment bank, was dismissed by former governor of the Bank of England Mervyn King over involvement in the global Libor interest rate scandal.

Staley built on the Diamond legacy, and through strong performance saw off the threat from activist investor Ed Bramson.

What is evident now is that the Barclays board, headed by former Rothschild & Co grandee Nigel Higgins, and to a lesser extent regulators, sought to keep Staley on board after a series of mishaps.

One understands the motive. Staley is an effective investment banker, skilful at building and maintaining a trading presence. He backed Elon Musk at Tesla long before anyone guessed the electric car company would become the most valuable in the world.

His success and convincing family demeanour meant that a Barclays board, ultimately responsible for oversight of ethics, was far too willing to take what he said at face value. No one in the UK could possibly be unaware of the sleaze surrounding Staley’s former client and friend Jeffrey Epstein.

It resulted in the King’s brother Prince Andrew being cast into the outer darkness and British socialite Ghislaine Maxwell ending up in an American prison.

Yet in spite of all the public noise, the Barclays board continued to support Staley’s version of his dealings with Epstein, concluding he had been sufficiently transparent with executives.

As for regulators, only the former Bank of England governor Mark Carney was sufficiently aware of the danger that Staley’s relationship to Epstein might pose to Barclays. He reportedly asked Higgins to tell Staley to consider his position. On this occasion (in contrast with Diamond), the governor’s intervention was not sufficient.

As the net closed around Epstein’s associates in November 2021, and a torrent of new information about the intimacy of the relationship between sex offender Epstein and Staley emerged, the Barclays boss resigned to clear his name. The latest repellent trove of emails, released as a result of a lawsuit lodged by the Virgin Islands against JP Morgan, alleges exchanges of pornographic images and the use of the names of Disney characters to describe Staley’s encounters as an Epstein guest. The salacious details are a huge embarrassment for other financial bigwigs who fawned over Epstein.

Most critically, it shows flaccid members of Barclays board fixated on returns rather than values and UK regulators in thrall to the City establishment. If honour still exists, the chairman and non-executives at Barclays should be considering whether they can bear to be part of this morally reprehensible charade much longer.

This post first appeared on Dailymail.co.uk