WEBVTT - INTERVIEW: Barclays CEO Sits Down For An Exclusive Conversation With Bloomberg 0:00:00.040 --> 0:00:02.040 I am delighted to be joined by the Barclays chief 0:00:02.040 --> 0:00:02.800 executive officers. 0:00:03.080 --> 0:00:04.480 Then, Kat, thank you for joining us. 0:00:04.480 --> 0:00:08.119 First of all, congratulations a pretty strong set of results. 0:00:08.480 --> 0:00:10.080 A lot of it has to do with fake What 0:00:10.440 --> 0:00:12.600 do you see in terms of main drivers going forward? 0:00:12.680 --> 0:00:14.920 Yeah, thank you frand Scene. Great to be here with you. 0:00:15.640 --> 0:00:17.560 And yes, it was a very nice set of results 0:00:17.560 --> 0:00:21.000 this morning that we were privileged to publish. What I 0:00:21.120 --> 0:00:24.000 liked about the results friand Scene is not just the numbers, 0:00:24.520 --> 0:00:27.120 but the composition of it. And Fink was an important part, 0:00:27.160 --> 0:00:30.040 but not the only part. So if you look at 0:00:30.040 --> 0:00:33.560 the numbers, top line, uh, you know, two point six 0:00:33.600 --> 0:00:37.120 billion of profit before tax and sterling, it's about up 0:00:37.159 --> 0:00:40.440 sixteen percent, Revenues up around eleven percent, seven point two 0:00:40.479 --> 0:00:44.400 billion pounds, an excellent rote of fifteen percent across the 0:00:44.400 --> 0:00:46.720 group capital ending where we would like it to be. 0:00:47.720 --> 0:00:49.839 One of the you know, a record quota of performance 0:00:49.840 --> 0:00:51.960 for the bank and the second biggest for the corporate 0:00:52.000 --> 0:00:57.040 and investment bank. So all very good. Now what drives it? 0:00:57.160 --> 0:01:00.279 And that's the important part, and for us, it's actually 0:01:00.320 --> 0:01:03.440 been the workings of many, many quarters of building this. 0:01:04.120 --> 0:01:05.960 And there are two parts I'd like to highlight. 0:01:06.640 --> 0:01:07.319 The first is. 0:01:07.240 --> 0:01:10.080 The investments which we've made in our business, whether it's 0:01:10.120 --> 0:01:12.440 in our credit card portfolios in the US where we 0:01:12.480 --> 0:01:16.560 acquired a gap portfolio of ten million customers, and whether 0:01:16.680 --> 0:01:20.000 it is in our market's business where not just investment 0:01:20.040 --> 0:01:23.640 in technology and people in fixed income, but also in 0:01:23.680 --> 0:01:27.039 our trading systems, but also in financing, both in fixed 0:01:27.040 --> 0:01:30.360 income and in equities prime, which continue to help us 0:01:30.400 --> 0:01:31.280 in this environment. 0:01:31.360 --> 0:01:33.520 So if you look at FIG Trading, are you expecting 0:01:33.520 --> 0:01:35.280 this momentum to go into the second quarter? 0:01:36.000 --> 0:01:39.360 So we hope to keep the market share that we 0:01:39.400 --> 0:01:42.160 have gained with our clients over a number of years. 0:01:42.640 --> 0:01:48.680 To persist, we've broadened and deepened relationships. The actual dollar 0:01:48.760 --> 0:01:51.200 amount of revenues, of course, goes up and down with 0:01:51.280 --> 0:01:54.560 volatility in the markets, and that's much much harder to predict. 0:01:54.800 --> 0:01:57.240 But what we try to do is to have that capability. 0:01:57.600 --> 0:02:00.600 So is this a kind of diversification for the rest 0:02:00.640 --> 0:02:03.480 when you look at your main drivers going forward. 0:02:04.920 --> 0:02:06.920 Well, what we hope is that we have a lot 0:02:07.000 --> 0:02:10.680 of drivers and that at the right times in the market, 0:02:10.800 --> 0:02:13.840 that they all are there and they click. So, you know, 0:02:13.960 --> 0:02:16.840 the first quarter of this year was a lot about 0:02:16.840 --> 0:02:19.440 the bond markets. Interest rates went up and down with 0:02:19.560 --> 0:02:21.960 the stuff in banking that happened in the US, and 0:02:22.000 --> 0:02:25.440 I'm sure we'll talk about that. The first quarter a 0:02:25.560 --> 0:02:29.280 year ago was about equity ball single stocks, and then 0:02:29.320 --> 0:02:31.560 our equity business was ready to capture that. So that's 0:02:31.560 --> 0:02:33.320 how we try to do it. I have a full 0:02:33.320 --> 0:02:34.320 fledged capability. 0:02:34.520 --> 0:02:36.960 So when you look at marked was pretty incredible. 0:02:37.000 --> 0:02:38.840 When you look at the banks starting with the SVB 0:02:38.960 --> 0:02:41.959 and then CREDI, sweez. Does that mean that you had 0:02:42.000 --> 0:02:44.200 deposits that people come to you because they were afraid 0:02:44.200 --> 0:02:44.880 of other banks. 0:02:45.400 --> 0:02:50.239 So the UK has been more insulated from that deposit 0:02:50.320 --> 0:02:54.880 flight across banks then certainly the US has been between 0:02:54.919 --> 0:02:56.160 the regionals and the big. 0:02:56.000 --> 0:02:56.920 Money center banks. 0:02:57.480 --> 0:03:00.440 Having said that, our deposit franchise grew by about ten 0:03:00.480 --> 0:03:03.760 billion pounds during the quarter, and a lot of that 0:03:04.400 --> 0:03:09.360 was actually people corporates putting deposits with us. On the 0:03:09.400 --> 0:03:12.680 consumer side, it dropped a little, but that seasonality we 0:03:12.760 --> 0:03:15.880 expect as people pay their income tax bills and draw 0:03:15.919 --> 0:03:18.079 money from their accounts to do that. So the deposit 0:03:18.120 --> 0:03:21.799 franchise has behaved extremely well and predictably. 0:03:22.360 --> 0:03:23.480 But it's also for US. 0:03:23.520 --> 0:03:26.880 It's a deposit franchise that we've built over decades, right, 0:03:26.960 --> 0:03:32.360 with a very nice mixture of individuals of corporates, small businesses. 0:03:33.200 --> 0:03:35.360 But do you expect the worst of the banking turmoil 0:03:35.400 --> 0:03:35.800 to be over? 0:03:35.800 --> 0:03:36.320 It's unclear. 0:03:36.360 --> 0:03:38.280 So some people think that there was a banking turmoil 0:03:38.280 --> 0:03:40.920 in March. Others say, look, it's two specific cases for 0:03:40.960 --> 0:03:42.120 two specific reasons. 0:03:42.400 --> 0:03:43.800 How do you see it going forward? 0:03:44.440 --> 0:03:47.440 So I think I think the Credit SUEEE was a 0:03:47.560 --> 0:03:51.120 very specific case, while I think Silicon Valley Bank was 0:03:51.160 --> 0:03:54.480 a specific case in terms of its circumstances. It has 0:03:54.600 --> 0:03:57.520 highlighted an issue with some of the regional banks in 0:03:57.560 --> 0:04:01.200 the US and that we will see continuing to play out, 0:04:01.240 --> 0:04:04.120 maybe in a small number of names. And we've seen 0:04:04.160 --> 0:04:06.920 First Republic over the last couple of days, so I 0:04:07.000 --> 0:04:09.520 expect that we will see over a small number of names. 0:04:09.520 --> 0:04:13.920 It's not going to be systemic in any way, but 0:04:14.000 --> 0:04:15.320 there will be repercussions. 0:04:15.560 --> 0:04:18.479 And it hasn't changed the way in which Barclay's behaves all. 0:04:18.520 --> 0:04:21.040 As you said, the UK was pretty immune to that. 0:04:21.200 --> 0:04:23.480 Or are you looking, for example, at possibly buying c 0:04:23.480 --> 0:04:24.480 forrety sweet assets? 0:04:26.240 --> 0:04:30.440 So the UK has been immune from the deposit franchise. Obviously, 0:04:30.480 --> 0:04:33.400 what's happened in the US and with Credit Suite affected 0:04:33.440 --> 0:04:37.640 market volatility, especially in interest rates, and that our trading 0:04:37.640 --> 0:04:44.240 businesses engage in the coming back to assets. Look, we 0:04:44.400 --> 0:04:49.680 have built up our business over quarters and years. We 0:04:49.920 --> 0:04:53.080 have you know, we when Credit Suee got out of 0:04:53.120 --> 0:04:56.440 the prime business, we hired a few of their people 0:04:56.800 --> 0:04:59.120 and some of their clients chose to work with us, 0:04:59.400 --> 0:05:02.279 so we were about that. I think a lot of 0:05:02.320 --> 0:05:05.000 the assets shifting happened before this period. 0:05:05.640 --> 0:05:08.960 When you look forward into what the banking you know, 0:05:09.000 --> 0:05:11.960 the banking world looks like, are you expecting more regulation 0:05:12.120 --> 0:05:14.599 or are you expecting also consumer behavior as would possibly 0:05:14.600 --> 0:05:15.520 go into a downturn. 0:05:16.839 --> 0:05:21.640 So on the banking world, I think regulation will with 0:05:21.760 --> 0:05:25.360 some delay and with some benefit of perspective. Look at 0:05:25.360 --> 0:05:29.640 what happened in March, and whether it's thinking about liquidity, 0:05:29.680 --> 0:05:34.240 whether it's thinking about you know, the digital nature of liquidity, 0:05:34.279 --> 0:05:36.800 how fast people can withdraw. I'm sure they're going to 0:05:36.839 --> 0:05:39.840 look at it. They're also probably going to look at 0:05:39.839 --> 0:05:43.720 how they supervise big banks versus smaller banks. So I imagine 0:05:43.640 --> 0:05:45.880 there's there's going to be some of that and I 0:05:45.880 --> 0:05:48.920 think we'll see the first installment in the US when 0:05:48.920 --> 0:05:51.800 the FED is giving its own report, I think on 0:05:51.880 --> 0:05:52.599 the first of May. 0:05:52.920 --> 0:05:54.600 But do you see distress in the market. 0:05:54.600 --> 0:05:57.320 It's pretty incredible to me to look at interest rates 0:05:57.320 --> 0:05:59.680 going from one to five percent without you know, that 0:05:59.839 --> 0:06:00.640 much breaking. 0:06:00.800 --> 0:06:04.440 Yeah, so I do think that you're seeing an impact 0:06:04.520 --> 0:06:09.839 on consumers. That impact has been really really cushioned by 0:06:09.960 --> 0:06:14.360 the starting conditions because people had more wealth, and by 0:06:14.520 --> 0:06:18.960 employment continuing to hold so people have jobs. So, for instance, 0:06:19.000 --> 0:06:23.720 if you look at the UK, two things we expect 0:06:24.240 --> 0:06:27.480 for the median too, family household with a median house 0:06:28.200 --> 0:06:31.679 that compared to spending about twenty percent of their income 0:06:31.720 --> 0:06:36.680 on mortgages on mortgage payments in the decade twenty ten 0:06:36.720 --> 0:06:39.800 to nineteen, by the time this year ends, it will 0:06:39.839 --> 0:06:40.960 be about twenty eight percent. 0:06:41.080 --> 0:06:42.640 So that's a reasonably big number. 0:06:43.440 --> 0:06:47.920 We've also seen that when in March, when we look 0:06:47.960 --> 0:06:50.200 at the spending data of our customers debit card and 0:06:50.240 --> 0:06:53.920 credit card customers, what we've seen is that while inflation 0:06:54.040 --> 0:06:57.800 year over year was called it nine percent, their expenses 0:06:58.279 --> 0:07:01.800 went up about four or five percent. So they're economizing. 0:07:02.520 --> 0:07:06.719 They're either buying items that cost less or they're spending 0:07:06.760 --> 0:07:09.760 less normally, and I think so people are managing their 0:07:09.800 --> 0:07:12.880 balance sheet. What we have not seen is signs of 0:07:12.920 --> 0:07:15.920 distress among customers, which is a good thing, which is 0:07:15.920 --> 0:07:18.120 a great thing. Which is a great thing, which I think. 0:07:18.160 --> 0:07:21.360 People are economizing. They have jobs, which is great. That's 0:07:21.360 --> 0:07:23.160 why it's important to have economic growth. 0:07:23.480 --> 0:07:25.600 So we heard it from the chief Economists of the 0:07:25.640 --> 0:07:27.840 Bank of England saying, look, people should accept in the 0:07:27.920 --> 0:07:29.280 UK that they will be poor. 0:07:29.960 --> 0:07:30.920 Is that what you're seeing? 0:07:30.920 --> 0:07:33.280 I mean, is that kind of the pattern that you 0:07:33.320 --> 0:07:34.880 could see in terms of consumer spending. 0:07:36.800 --> 0:07:39.600 So yeah, I saw the choice of words and I'm 0:07:39.600 --> 0:07:41.240 not going to dispute the Bank of England here. 0:07:41.320 --> 0:07:42.320 Here's what I would say. 0:07:43.360 --> 0:07:47.320 People are shifting their consumers spending I think from more 0:07:47.360 --> 0:07:50.040 expensive to less expensive, and they're choosing what they spend 0:07:50.080 --> 0:07:55.680 on sometimes that might just be better, right, But it's 0:07:55.720 --> 0:07:58.240 obviously happening because of inflation pressures. 0:07:58.720 --> 0:08:02.679 But it's readjusting your You're not seeing something worrisome and loans. 0:08:02.720 --> 0:08:04.760 I know there was an impairment actually in your numbers, 0:08:05.240 --> 0:08:07.440 you know, what are the details on that. There's nothing 0:08:07.800 --> 0:08:11.960 something impending that can actually really be worry. 0:08:11.680 --> 0:08:15.400 Some we're not seeing except in the very fine margins 0:08:15.440 --> 0:08:18.040 of very low rates, some increase in stress. We're not 0:08:18.040 --> 0:08:22.440 seeing that at all. The impairment you're seeing. Our impairment 0:08:22.480 --> 0:08:25.440 number was around five hundred million pounds compared to about 0:08:25.880 --> 0:08:28.680 one hundred and fifty a year ago. Most of that 0:08:28.840 --> 0:08:31.119 is the build up of the balances in our us 0:08:31.120 --> 0:08:35.319 Cord's portfolio, where it's sort of automatic. We build up balances, 0:08:35.360 --> 0:08:36.320 we create impairment. 0:08:36.880 --> 0:08:39.240 When you look at the world, what worries you in 0:08:39.320 --> 0:08:41.280 terms of regions, term of spending and how does that 0:08:41.280 --> 0:08:45.160 impact your strategy. I know India, for example, is increasing 0:08:45.200 --> 0:08:47.880 its wealth quite significantly. Do you have a strategy specifically 0:08:47.920 --> 0:08:48.959 for India? 0:08:49.080 --> 0:08:52.679 Yeah, I mean India is a very good question. We 0:08:52.840 --> 0:08:55.560 have long had a very strong investment banking presence in 0:08:55.559 --> 0:08:59.080 India and it has contributed well to US and in 0:08:59.120 --> 0:09:03.400 fact we participant in many transactions last year. So I 0:09:03.440 --> 0:09:07.319 think we will continue to invest in people in our 0:09:07.320 --> 0:09:11.240 capability in India. You know other parts of the world, 0:09:11.360 --> 0:09:15.760 I mean, we have generally outside we've concentrated on Europe, 0:09:16.320 --> 0:09:20.080 the UK, and the US. We've got a footprint in Asia, 0:09:20.120 --> 0:09:25.080 which is India, Singapore, Hong Kong and Tokyo, and we 0:09:25.120 --> 0:09:27.160 expect to keep that footprint. 0:09:27.200 --> 0:09:30.160 Did the Imbani saga change anything in how people invest 0:09:30.240 --> 0:09:30.640 in India? 0:09:31.559 --> 0:09:33.320 I don't think so. I don't think so. 0:09:33.360 --> 0:09:36.520 It seemed particular to that company, and that company seems 0:09:36.520 --> 0:09:38.400 to have taken quite a lot of steps to improve 0:09:38.400 --> 0:09:40.640 its own financial position, So that's good. 0:09:40.960 --> 0:09:42.839 Is there anything in liquidity that you worry when you 0:09:42.880 --> 0:09:46.760 look at the functioning of the markets. 0:09:47.440 --> 0:09:50.160 It's much better now than it was six months ago, 0:09:50.200 --> 0:09:53.720 particularly in gelts. So let's begin here at home in London. 0:09:54.840 --> 0:09:57.839 The guilt market, as you remember from September October was 0:09:57.920 --> 0:10:02.480 quite something, was quite something. That market has the strains 0:10:02.520 --> 0:10:05.600 in that market have considerably improved, and you can see 0:10:05.600 --> 0:10:08.040 it in the improved quality of Sterling. I mean Sterling 0:10:08.120 --> 0:10:11.840 is eking its way back up, So that market has improved. 0:10:12.440 --> 0:10:15.640 I think in the US markets there have been spots 0:10:15.640 --> 0:10:20.080 of illiquidity in treasuries and even in corporates. And you know, 0:10:20.120 --> 0:10:22.200 we have the debt ceiling issue ahead of us, so 0:10:22.240 --> 0:10:25.560 we have to watch what does the debt I mean worst. 0:10:25.320 --> 0:10:27.120 Case scenario for the dead ceiling. And I don't know 0:10:27.160 --> 0:10:30.320 whether you actually model this worst and best case scenario. 0:10:30.400 --> 0:10:33.240 So best case scenario, nothing really happens. Worst case scenario, 0:10:33.280 --> 0:10:35.000 could we actually see a US default? 0:10:35.840 --> 0:10:38.560 I very much doubt it. I very much doubt it. 0:10:38.600 --> 0:10:42.640 I think we've gone through this before and solutions always prevail. 0:10:42.840 --> 0:10:45.679 And people in Washington are beginning to talk, and there 0:10:45.679 --> 0:10:49.120 are proposals on both sides of the island Washington. So 0:10:49.840 --> 0:10:52.800 I think it's all of us have to prepare for 0:10:52.880 --> 0:10:56.080 these eventualities. But I doubt this eventuality will come. 0:10:56.360 --> 0:10:57.559 We're here in Canary Wharf. 0:10:57.559 --> 0:11:00.199 You are the most beautiful actually if you I think 0:11:00.240 --> 0:11:02.480 of all of London. Are you committed to Canary Wharf 0:11:02.840 --> 0:11:03.360 and London? 0:11:03.679 --> 0:11:06.960 Yeah, well, we've just built four new wonderful trading flows 0:11:06.960 --> 0:11:11.280 in this building, and so we have invested in this building. 0:11:11.360 --> 0:11:15.760 We've invested in Canary Wharf and in London, you know, 0:11:15.840 --> 0:11:18.480 and across the UK. You know, we've built wonderful campus 0:11:18.480 --> 0:11:21.960 in Glasgow, so we do like to have a presence 0:11:21.960 --> 0:11:22.680 across the UK. 0:11:23.160 --> 0:11:27.240 You've also come back after you know, a tough year. Yes, 0:11:27.520 --> 0:11:29.040 what's it been like coming back? 0:11:29.360 --> 0:11:31.600 Thank you? It's actually been wonderful to come back. 0:11:33.040 --> 0:11:35.160 You know, I was sick and I worked for a 0:11:35.160 --> 0:11:38.800 few months through my treatment, but I worked at home 0:11:39.360 --> 0:11:41.600 and sort of to reflect on that and reflect on 0:11:41.640 --> 0:11:46.200 the hybrid situation. What I can say is personally, I 0:11:46.200 --> 0:11:48.559 have experienced the joy of being back in the office, 0:11:48.559 --> 0:11:51.720 of being able to interact more casually with colleagues, and 0:11:51.760 --> 0:11:54.120 I think it's improved my productivity and it's improved my 0:11:54.160 --> 0:11:54.800 frame of mind. 0:11:55.480 --> 0:11:57.240 So I'm very happy to be back. 0:11:57.480 --> 0:12:00.720 Has it changed the way you see actually the working 0:12:00.760 --> 0:12:02.840 model at all for your employees. 0:12:04.640 --> 0:12:10.360 It's made something that was in my mind intellectual more tangible, 0:12:10.480 --> 0:12:13.600 which is I always knew that there was a benefit 0:12:13.640 --> 0:12:17.280 of being in person and being around the office, and 0:12:17.320 --> 0:12:20.200 now I've experienced it. Because it's one thing when you're 0:12:20.240 --> 0:12:23.040 in COVID and everybody is away. It's another thing when 0:12:23.040 --> 0:12:25.800 you're sick and you're alone, but everybody's in the office, 0:12:26.320 --> 0:12:27.120 not all the time. 0:12:27.559 --> 0:12:28.240 Now, there are. 0:12:28.120 --> 0:12:31.480 Many benefits that have come from hybrid working which we 0:12:31.559 --> 0:12:34.480 should all use and we should we should capitalize on 0:12:34.960 --> 0:12:38.560 the flexibility and the acceptance of flexibility, which is I 0:12:38.559 --> 0:12:40.959 think the most important thing, and so we want to 0:12:41.040 --> 0:12:45.480 keep that. We don't want to dispel it. I'm very 0:12:45.480 --> 0:12:48.440 happy to say we were very satisfied, you know, Barclay's UK. 0:12:48.800 --> 0:12:51.439 In the UK, we've been named for the third year 0:12:51.440 --> 0:12:53.640 in a row as the LinkedIn Employer of the Year, 0:12:54.440 --> 0:12:58.000 so we hope that we are trying to get that 0:12:58.080 --> 0:12:58.720 mixed correct. 0:12:59.080 --> 0:13:02.720 How do you view AI, that's the big question. Yeah, 0:13:02.880 --> 0:13:05.160 we don't have an hour unfortunately to talk about it. 0:13:05.920 --> 0:13:08.520 So the most important thing for me in that is 0:13:08.559 --> 0:13:13.480 to try to educate myself on it. From everything I 0:13:13.600 --> 0:13:18.640 understand and what I have seen, it is and can 0:13:18.679 --> 0:13:23.320 represent a remarkable improvement in productivity and find ways to 0:13:23.360 --> 0:13:28.880 do certain tasks better by being able to map relationships 0:13:28.960 --> 0:13:32.160 as opposed to just a listing of facts. So I 0:13:32.160 --> 0:13:34.559 think the potential is enormous and I think it behooves 0:13:35.720 --> 0:13:39.439 all of us and organizations to try to understand what 0:13:39.480 --> 0:13:41.679 it is. I'm sure it will always be more than 0:13:41.679 --> 0:13:44.560 what we thought and less than what people, you know, 0:13:44.600 --> 0:13:47.880 the people who are the greatest enthusiasts believe. 0:13:48.520 --> 0:13:50.160 So what does that look like at Barclay So you're 0:13:50.200 --> 0:13:52.800 deploying and I don't know whether this goes back to costs. 0:13:52.800 --> 0:13:56.160 Maybe costs we're a little bit disappointing, but you also 0:13:56.200 --> 0:13:58.320 have to grow and invest it. Is there a parallel 0:13:58.360 --> 0:14:01.480 to what you could achieve with a or new technology. 0:14:02.200 --> 0:14:05.120 So it's a very good question. I think there is. 0:14:05.920 --> 0:14:09.319 I think in the end, efficiency will come. 0:14:09.160 --> 0:14:10.640 From technology and digitization. 0:14:11.320 --> 0:14:14.640 And the question for us, for instance, in AI is 0:14:14.720 --> 0:14:18.840 when you're looking at patterns and you're looking at relationships. 0:14:18.960 --> 0:14:20.560 You know, one of the areas where we see a 0:14:20.560 --> 0:14:26.640 lot of it is in financial crime aml kyic relationships 0:14:26.680 --> 0:14:29.520 between transactions. Is there a way to do this better 0:14:29.520 --> 0:14:34.560 that brings efficiency and brings actually better performance, you know, 0:14:34.640 --> 0:14:37.760 our own costs this quarter? Coming back to that question, 0:14:38.920 --> 0:14:41.880 we have invested in our businesses. We continue to invest 0:14:42.560 --> 0:14:46.600 and those investments have been profitable, and we take it 0:14:46.720 --> 0:14:49.760 very carefully and deliberately and over many quarters. And what 0:14:49.800 --> 0:14:53.640 you've seen in this first quarter is what I think 0:14:53.680 --> 0:14:55.800 would be the peak of our investment for this year. 0:14:56.320 --> 0:14:58.480 Anything that worries you actually in the next two to 0:14:58.480 --> 0:15:00.920 three years, I mean today was a strong day. Yeah, 0:15:00.960 --> 0:15:02.840 I think we're also looking at you know, fake and 0:15:03.320 --> 0:15:05.120 the only bank that did as well as you was 0:15:05.160 --> 0:15:08.960 probably Bank of America. How hard are the next twelve months. 0:15:08.680 --> 0:15:09.080 Going to be? 0:15:10.640 --> 0:15:14.080 So I think there's a part of there are three 0:15:14.120 --> 0:15:17.440 parts to that. One part of hard is how's the 0:15:17.560 --> 0:15:20.120 environment going to be and I think that's a little 0:15:20.160 --> 0:15:23.760 hard to predict. I mean, we've been very cautious for 0:15:23.800 --> 0:15:26.400 the last number of quarters. But if you told me 0:15:26.480 --> 0:15:29.160 on the first of January of this year that in 0:15:29.200 --> 0:15:31.640 the first quarter the sector that would be in crisis 0:15:31.640 --> 0:15:32.160 as banks, I. 0:15:32.120 --> 0:15:36.720 Wouldn't have believed you. So the thing is we don't know. 0:15:38.200 --> 0:15:42.080 So I think that volatility alone, while it brings opportunities 0:15:42.080 --> 0:15:45.800 in certain businesses, for us, is something that gives us caution. 0:15:46.120 --> 0:15:49.800 Right the investment banking landscape, now we did well in 0:15:49.800 --> 0:15:50.480 investment banking. 0:15:50.520 --> 0:15:51.400 We actually had very. 0:15:51.320 --> 0:15:56.000 Strong results, but we were the least negative, right, So 0:15:56.080 --> 0:16:00.360 that business itself is smaller for across the street because 0:16:00.400 --> 0:16:04.800 fewer deals are getting done, IPOs are scarce. So we 0:16:04.840 --> 0:16:07.400 think those are all things that weigh against it. I 0:16:07.440 --> 0:16:11.480 think on the consumer side, while the consumer is still 0:16:11.520 --> 0:16:15.000 holding up, if the pressure continues for longer and longer 0:16:15.040 --> 0:16:17.400 and longer, we have to worry. So I think it 0:16:17.440 --> 0:16:18.840 behooves us to be cautious. 0:16:19.320 --> 0:16:21.000 When are you expecting all of the you know, the 0:16:21.000 --> 0:16:24.600 pipeline of deals to come back to normalize. 0:16:25.400 --> 0:16:28.560 I think you've got to see the end or the 0:16:28.600 --> 0:16:31.640 science of the end of the interest rate cycle. When 0:16:31.680 --> 0:16:34.160 you and I last spoke in October, I had said 0:16:34.200 --> 0:16:35.960 I thought it would be in the middle of this year. 0:16:36.880 --> 0:16:39.040 I still think, give or take, it could be. It 0:16:39.080 --> 0:16:41.880 could be the third quarter. I think what's happened with 0:16:42.000 --> 0:16:46.480 banks is probably and the worries about, especially in the US, 0:16:46.880 --> 0:16:49.480 how much credit might be extended into the economy from 0:16:49.480 --> 0:16:52.200 the region or might not be because of the issues 0:16:52.240 --> 0:16:55.040 with the regional banks could postpone that point. 0:16:55.480 --> 0:16:56.600 So we have to see. 0:16:56.600 --> 0:16:59.560 But it's probably closer to the end of the year 0:17:00.040 --> 0:17:00.800 in the middle part. 0:17:00.880 --> 0:17:03.840 So this is basically montary policy transmission, right. 0:17:03.880 --> 0:17:05.920 The fact that it could take up to eighteen months 0:17:06.080 --> 0:17:08.320 or I mean everyone or the market is expecting cuts 0:17:08.359 --> 0:17:08.840 from the Fed. 0:17:09.320 --> 0:17:12.200 Yeah, is that your base case? 0:17:12.760 --> 0:17:13.040 No? 0:17:13.760 --> 0:17:16.679 I think first we have to see the stop. We 0:17:16.760 --> 0:17:19.840 have to see interest rate rises stop, and then I 0:17:19.840 --> 0:17:22.080 think there will be a holding period, a. 0:17:22.040 --> 0:17:25.280 Holding period so where we have higher interest rates for 0:17:25.400 --> 0:17:25.880 much longer. 0:17:26.160 --> 0:17:26.720 Is this a new. 0:17:26.640 --> 0:17:30.720 Normal, Well, it could be an old normal. I mean 0:17:30.800 --> 0:17:33.200 thirty years ago, this is what it was. Right when 0:17:33.240 --> 0:17:35.280 I joined this industry, the FED funds rate was around 0:17:35.320 --> 0:17:41.040 five percent. So the question is whether what we've seen 0:17:41.080 --> 0:17:44.600 in the last twenty twenty five years was an abnormal 0:17:44.640 --> 0:17:47.240 period of low interest rates, and what we are going 0:17:47.280 --> 0:17:49.400 back to is actually what it should have been over 0:17:49.440 --> 0:17:50.560 the much longer period of time. 0:17:50.960 --> 0:17:53.760 Is that how you see it, that this is normalizing 0:17:53.800 --> 0:17:54.840 instead of the new normal? 0:17:55.440 --> 0:17:59.240 I think I see it personally as normalizing, but that 0:17:59.320 --> 0:18:01.359 may reflect my age more than anything else. 0:18:01.680 --> 0:18:03.480 But it changes I mean, I guess it also changes 0:18:03.520 --> 0:18:05.679 trade or you know, psychology and market psychology. 0:18:05.920 --> 0:18:07.680 If this is going to. 0:18:07.640 --> 0:18:11.600 Be for the foreseeable future where we are. 0:18:10.800 --> 0:18:11.760 It does it does? 0:18:11.840 --> 0:18:15.160 I mean, first of all, if the risk free rate 0:18:15.280 --> 0:18:18.359 has now become five percent instead of zero, then it 0:18:18.440 --> 0:18:21.240 changes the hurdle for a whole host of investments, which 0:18:21.240 --> 0:18:24.119 is what you're seeing right, what you're seeing in the market. 0:18:24.359 --> 0:18:27.000 The second is the transition from zero to five. 0:18:28.400 --> 0:18:31.320 While it is well telegraphed, not very many people have 0:18:31.400 --> 0:18:34.119 lived through it, and you are seeing that again in 0:18:34.200 --> 0:18:36.919 the way in which certain acid portfolios have reacted to 0:18:37.440 --> 0:18:41.800 rising rates. We have tried to position ourselves carefully for it, 0:18:41.880 --> 0:18:46.200 but nobody gets this perfectly. And then once you stay 0:18:46.240 --> 0:18:47.920 at that higher level of rates, we've got to look 0:18:47.920 --> 0:18:50.879 at what volatility there will be and how business models evolve, 0:18:51.320 --> 0:18:53.119 and you're right, that's going to be new and different. 0:18:54.119 --> 0:18:57.520 You also have a former shareholder activist of Barclays that 0:18:57.560 --> 0:19:00.639 says there should be a probe into you direct ties 0:19:00.680 --> 0:19:03.240 with Jeffrey Epstein, Like, what's your response to that. 0:19:05.040 --> 0:19:07.680 Well, so two things I think. First of all, there 0:19:07.680 --> 0:19:10.760 are new allegations. Our board has spoken about these new allegations. 0:19:10.800 --> 0:19:13.720 They're serious. We are in no position to comment. I'm 0:19:13.720 --> 0:19:16.760 in no position to comment. They are being adjudicated in 0:19:16.800 --> 0:19:19.400 New York and we are not party to that, so 0:19:19.680 --> 0:19:21.440 I have no view on that. 0:19:21.680 --> 0:19:25.160 I know our board well. They're very thoughtful, deliberate people. 0:19:25.240 --> 0:19:28.679 Deliberative people, and while I was not a member of 0:19:28.720 --> 0:19:32.479 the board, I know individually and collectively that they employ 0:19:32.680 --> 0:19:34.240 very careful and. 0:19:35.800 --> 0:19:37.760 Detailed processes to reach their decisions. 0:19:38.359 --> 0:19:39.800 Kat, thank you so much. That was, of course a 0:19:39.840 --> 0:19:43.000 Barclays chief executive officer. And I also dicorrect myself because 0:19:43.000 --> 0:19:45.520 I think I meant a dining instead of umbona, So 0:19:45.560 --> 0:19:46.160 that was my fault. 0:19:46.280 --> 0:19:46.680 That's okay. 0:19:47.720 --> 0:19:49.840 Thank you so much for your time with us today.