1
00:00:00,120 --> 00:00:03,520
Speaker 1: A great investment bank franchise here in New York and

2
00:00:03,640 --> 00:00:06,200
Speaker 1: in London, and you know, being one of the few

3
00:00:06,280 --> 00:00:08,840
Speaker 1: European investment banks out there today. I think it's a

4
00:00:08,840 --> 00:00:14,239
Speaker 1: competitive advantage for Barkley's. How though, does ring fencing right,

5
00:00:14,320 --> 00:00:16,959
Speaker 1: the funding costs that that imposes on your bank, the

6
00:00:17,079 --> 00:00:21,040
Speaker 1: UK balance sheet tax, bonus caps and the senior managed

7
00:00:21,079 --> 00:00:24,360
Speaker 1: regime not put you at a disadvantage relative to say,

8
00:00:24,560 --> 00:00:28,639
Speaker 1: JP Morgan, Bank of America, Citygroup, Goldman Sacks, Morgan, Stanley,

9
00:00:28,760 --> 00:00:31,640
Speaker 1: the list goes on. You know, having worked with JP Morgan,

10
00:00:31,800 --> 00:00:33,640
Speaker 1: I as sure there's no one they're saying, boy, we

11
00:00:33,640 --> 00:00:36,080
Speaker 1: have a huge competitive advantage because our regulators are so

12
00:00:36,200 --> 00:00:39,120
Speaker 1: nice to us. I mean, everyone is facing the regulatory

13
00:00:39,200 --> 00:00:42,560
Speaker 1: challenge of a dusk of adjusting to the new realities

14
00:00:42,640 --> 00:00:47,320
Speaker 1: of the financial markets. I fundamentally believe that the UK

15
00:00:47,479 --> 00:00:51,519
Speaker 1: regulators want to see a British bank within the leading

16
00:00:51,600 --> 00:00:56,520
Speaker 1: investment banking group. UM. Remember it is, however, only of

17
00:00:56,520 --> 00:00:59,480
Speaker 1: our risk capital. You know, we are predominantly a retail

18
00:01:00,000 --> 00:01:03,520
Speaker 1: sumer corporate bank. UM. But I think the UK would

19
00:01:03,520 --> 00:01:06,720
Speaker 1: love to see a British bank as a major player

20
00:01:06,760 --> 00:01:09,759
Speaker 1: in the world's capital markets and that's what Barkley is today. Okay,

21
00:01:09,760 --> 00:01:12,480
Speaker 1: since you've created an opportunity for me, I want to

22
00:01:12,560 --> 00:01:19,840
Speaker 1: play a scenario game. Pretend I'm a multinational CEO. Remember

23
00:01:19,880 --> 00:01:23,160
Speaker 1: this is the world. To make believe my company is

24
00:01:23,160 --> 00:01:25,880
Speaker 1: active in capital markets. I do a lot of mergers

25
00:01:25,880 --> 00:01:29,520
Speaker 1: and acquisition. Tens of millions in fees are at stake.

26
00:01:30,160 --> 00:01:32,360
Speaker 1: I've decided to hold my own little bake off. Right,

27
00:01:32,600 --> 00:01:35,640
Speaker 1: JP Morgan or Barkley's. Jess Daley is called in to

28
00:01:35,800 --> 00:01:39,760
Speaker 1: close the deal. What's your pitch to me? There's so

29
00:01:39,880 --> 00:01:44,320
Speaker 1: much intellectual talent in Barkley's and and I think we

30
00:01:44,440 --> 00:01:46,640
Speaker 1: manage this bank with a set of values that I'm

31
00:01:46,760 --> 00:01:48,840
Speaker 1: very proud of and hopefully all the people of Barkley's

32
00:01:48,840 --> 00:01:51,280
Speaker 1: are very proud of. It's just the quality of our advice.

33
00:01:51,560 --> 00:01:54,800
Speaker 1: You know. We're gonna give our best foot forward, will

34
00:01:54,800 --> 00:01:58,640
Speaker 1: give the client our best ideas. We will our our

35
00:01:58,680 --> 00:02:01,360
Speaker 1: thoughts will be what is in their best interest, not

36
00:02:01,480 --> 00:02:04,920
Speaker 1: what gets a transaction done. JP Morgan is an outstanding bank,

37
00:02:05,400 --> 00:02:07,440
Speaker 1: but so is Barclay's, and so we'll let the CEO

38
00:02:08,040 --> 00:02:10,720
Speaker 1: decide between the two. All right, Now, The argument number

39
00:02:10,760 --> 00:02:13,600
Speaker 1: two against keeping the investment bank it's simply not profitable enough. Right,

40
00:02:13,800 --> 00:02:16,080
Speaker 1: look at the return on equity or tangible equity if

41
00:02:16,120 --> 00:02:19,520
Speaker 1: you prefer, look at the cost income ratio, what they

42
00:02:19,520 --> 00:02:22,679
Speaker 1: call the efficiency ratio. Here, look at your standing and

43
00:02:22,760 --> 00:02:26,320
Speaker 1: some of the most profitable, high margin businesses and investment banking,

44
00:02:26,400 --> 00:02:29,200
Speaker 1: you're not where you used to be, you know, like

45
00:02:29,280 --> 00:02:31,000
Speaker 1: a lot of investment banks is not all. We have

46
00:02:31,120 --> 00:02:33,919
Speaker 1: dramatically had to reduce our risk weighted assets. So we've

47
00:02:33,960 --> 00:02:37,320
Speaker 1: taken the risk on our investment banks balance sheet down

48
00:02:37,480 --> 00:02:41,960
Speaker 1: in half. Uh, faced with that headwind. Actually, from two

49
00:02:42,040 --> 00:02:45,079
Speaker 1: thousand and fourteen to fifteen, we doubled the return on

50
00:02:45,120 --> 00:02:48,079
Speaker 1: actually we doubled the profitility. We have a long way

51
00:02:48,120 --> 00:02:50,600
Speaker 1: to go. We've got to do a lot on managing

52
00:02:50,600 --> 00:02:54,880
Speaker 1: the costs in our investment bank. So we won't rest

53
00:02:55,160 --> 00:02:57,960
Speaker 1: until we deliver an investment bank a return on actually

54
00:02:58,000 --> 00:03:00,960
Speaker 1: that covers the cost of capital. But that's where gonna accomplish. Okay,

55
00:03:01,000 --> 00:03:04,680
Speaker 1: but that's an industry wide problem, right, and wishing isn't

56
00:03:04,680 --> 00:03:07,560
Speaker 1: going to fix it. We're not gonna wish. We're gonna

57
00:03:07,639 --> 00:03:10,920
Speaker 1: execute here at Barkley's to get there. But I do

58
00:03:11,120 --> 00:03:13,880
Speaker 1: fundamentally believe that if we're going to rely on the

59
00:03:13,960 --> 00:03:16,640
Speaker 1: global capital markets, which is, you know, mutual funds and

60
00:03:16,680 --> 00:03:20,040
Speaker 1: pension funds buying debt and equity issued by companies. I

61
00:03:20,080 --> 00:03:23,720
Speaker 1: don't believe the world will feel safe if we're relying

62
00:03:23,720 --> 00:03:27,200
Speaker 1: on a global capital markets where the intermediaries, the investment banks,

63
00:03:27,400 --> 00:03:30,720
Speaker 1: can't raise capital, can't earn a fairy turn to their shareholders.

64
00:03:30,880 --> 00:03:34,440
Speaker 1: It's just not a stable platform to fund the world's economy.

65
00:03:34,520 --> 00:03:37,240
Speaker 1: So how long till it course corrects? What's the catalyst?

66
00:03:37,720 --> 00:03:41,200
Speaker 1: Bec I think it's happening now? Um so, oh for sure.

67
00:03:41,480 --> 00:03:44,040
Speaker 1: I think all of the banks, I think are looking

68
00:03:44,080 --> 00:03:46,400
Speaker 1: at how to manage these balance sheets with far less

69
00:03:46,480 --> 00:03:48,720
Speaker 1: risk on them, in a way to deliver the capital

70
00:03:48,760 --> 00:03:51,600
Speaker 1: markets to clients, but in a way that delivers profitability

71
00:03:51,640 --> 00:03:54,960
Speaker 1: to our to our our our shareholders. Okay, and here's

72
00:03:54,960 --> 00:03:57,280
Speaker 1: the third argument. The culture simply can't be fixed. Right.

73
00:03:57,440 --> 00:04:01,320
Speaker 1: Your bank is paid twenty billion pounds in misconduct finds,

74
00:04:01,360 --> 00:04:04,080
Speaker 1: penalties and other costs wiped out your profit for what

75
00:04:04,160 --> 00:04:06,720
Speaker 1: five years? Most of that started here at the investment bank.

76
00:04:07,360 --> 00:04:09,760
Speaker 1: You know, I do. I've said this before, k I

77
00:04:09,760 --> 00:04:12,880
Speaker 1: do believe that Wall Street lost its way. Uh, you

78
00:04:12,880 --> 00:04:15,000
Speaker 1: know in the in the late nineties. Uh. I they

79
00:04:15,040 --> 00:04:19,080
Speaker 1: do believe that money became too much of a motivational factor.

80
00:04:19,600 --> 00:04:22,200
Speaker 1: I think banking has got to reverse back to the

81
00:04:22,240 --> 00:04:25,840
Speaker 1: time when it was a profession. When uh being a

82
00:04:25,839 --> 00:04:28,680
Speaker 1: practitioner in the profession of finance, it was like being

83
00:04:28,720 --> 00:04:31,960
Speaker 1: a lawyer or being a doctor. Um, we've got a

84
00:04:31,960 --> 00:04:34,479
Speaker 1: lot to atone for. We made a lot of mistakes,

85
00:04:35,080 --> 00:04:38,719
Speaker 1: but have no doubt the only existential risk of Bartley's

86
00:04:38,880 --> 00:04:41,040
Speaker 1: is if we get it wrong in the future on

87
00:04:41,040 --> 00:04:43,480
Speaker 1: on conduct. And everyone in this room knows that. Why

88
00:04:43,520 --> 00:04:45,839
Speaker 1: are you certain that you can change that conduct and

89
00:04:45,960 --> 00:04:49,400
Speaker 1: change that culture Because I started in the banking industry

90
00:04:49,480 --> 00:04:52,320
Speaker 1: that had the right conduct, that had the right culture.

91
00:04:52,600 --> 00:04:54,520
Speaker 1: So it's it's just going back to something that I've

92
00:04:54,520 --> 00:04:57,919
Speaker 1: seen before, and I think everybody in this room wants

93
00:04:57,960 --> 00:05:00,400
Speaker 1: to get there. But there are still in this room,

94
00:05:00,440 --> 00:05:03,760
Speaker 1: I'm sure, unreasonable expectations when it comes to compensation. You've

95
00:05:03,760 --> 00:05:07,359
Speaker 1: talked about the gulf right between expectations and you know

96
00:05:07,440 --> 00:05:11,480
Speaker 1: what's reasonable, what's rational and close that gap. We've reduced

97
00:05:11,480 --> 00:05:14,080
Speaker 1: the bonus pool at Barkley's, for instance, by over half

98
00:05:14,600 --> 00:05:16,800
Speaker 1: in the last four years, and they're all still here

99
00:05:17,240 --> 00:05:19,960
Speaker 1: and they're all working hard and and you know we

100
00:05:20,000 --> 00:05:22,240
Speaker 1: will get the culture in the right place. We need

101
00:05:22,279 --> 00:05:26,880
Speaker 1: to pay uh competitively. The people aren't here just because

102
00:05:27,000 --> 00:05:28,440
Speaker 1: of the check. They want to be here to do

103
00:05:28,480 --> 00:05:30,279
Speaker 1: the right things for a client. Don't You have to

104
00:05:30,279 --> 00:05:32,480
Speaker 1: be able to draw the line on pay even if

105
00:05:32,480 --> 00:05:36,640
Speaker 1: it costs you some talent. Sure, now we won't. I'm

106
00:05:36,640 --> 00:05:38,960
Speaker 1: not gonna I'm not gonna buy someone to come from

107
00:05:39,000 --> 00:05:43,000
Speaker 1: Barkley's never. So people have to come here and stay

108
00:05:43,040 --> 00:05:45,720
Speaker 1: here for reasons other than monetary game. But are you

109
00:05:45,760 --> 00:05:48,000
Speaker 1: buying people for example when we talk about your senior

110
00:05:48,000 --> 00:05:51,279
Speaker 1: management team, are you buying people from other places? For example?

111
00:05:51,320 --> 00:05:54,799
Speaker 1: You know Mr Compton, Mr Venta Chrishnan they left JP Morgan.

112
00:05:55,240 --> 00:05:57,000
Speaker 1: Did they leave JP Morgan for a pay cut? I

113
00:05:57,040 --> 00:06:00,080
Speaker 1: can't imagine they did, but there's no guaranteed compensation and

114
00:06:00,120 --> 00:06:02,040
Speaker 1: fridd And they came here because they want to help

115
00:06:02,080 --> 00:06:05,680
Speaker 1: Barkley's become a great institution. You believe that, yes, I do.

116
00:06:06,839 --> 00:06:09,800
Speaker 1: What is the one thing you need to do if

117
00:06:09,839 --> 00:06:13,400
Speaker 1: you're going to transform this room right into a Roman

118
00:06:13,440 --> 00:06:17,800
Speaker 1: galleon where everybody's roaring in your direction, you know, uh,

119
00:06:17,880 --> 00:06:21,600
Speaker 1: to reinsert the values of of of being a banker

120
00:06:21,680 --> 00:06:26,080
Speaker 1: as a profession you know, realizing that the real asset

121
00:06:26,160 --> 00:06:28,479
Speaker 1: of of a banker is the trust that are consumers

122
00:06:28,480 --> 00:06:31,400
Speaker 1: and clients place in us and you and you earn

123
00:06:31,480 --> 00:06:35,080
Speaker 1: that trust by always acting with the level of integrity

124
00:06:35,200 --> 00:06:37,800
Speaker 1: that stands you out amongst the industry. And I want

125
00:06:37,800 --> 00:06:40,440
Speaker 1: people at Barkley's to feel that and act that way,

126
00:06:40,720 --> 00:06:42,520
Speaker 1: and I believe that we can do that as a banker.

127
00:06:42,560 --> 00:06:45,839
Speaker 1: What's the single biggest risk to this company? The single

128
00:06:45,839 --> 00:06:51,000
Speaker 1: biggest risks company is um UH someone violating the values

129
00:06:51,160 --> 00:06:55,160
Speaker 1: of this firm. One last question here, Briggs it right,

130
00:06:55,279 --> 00:06:58,280
Speaker 1: ECB decision coming any moment. But another big topic for

131
00:06:58,320 --> 00:07:00,760
Speaker 1: Europe is the potential for a break that. Stuart Gulliver

132
00:07:00,920 --> 00:07:03,680
Speaker 1: says that HSPC would have to move a thousand people

133
00:07:04,240 --> 00:07:07,400
Speaker 1: from the UK to Paris in the event of a Brexit,

134
00:07:07,440 --> 00:07:10,040
Speaker 1: which is not out of the question. I have to

135
00:07:10,080 --> 00:07:12,880
Speaker 1: imagine you run the numbers. What would Barkley's do. You know,

136
00:07:13,320 --> 00:07:16,119
Speaker 1: We've come out publicly, our chairman UH and his Trammel

137
00:07:16,240 --> 00:07:20,880
Speaker 1: letters said we believe the best thing for our customers

138
00:07:20,880 --> 00:07:23,320
Speaker 1: and our clients in the United Kingdom is for the

139
00:07:23,440 --> 00:07:26,520
Speaker 1: UK to stay part of the European but if it doesn't,

140
00:07:26,880 --> 00:07:30,920
Speaker 1: you know, we will suffer because our customers and our

141
00:07:30,960 --> 00:07:34,679
Speaker 1: clients will suffer. In the UK. We're a UK bank,

142
00:07:34,920 --> 00:07:37,400
Speaker 1: so inside of the United Kingdom we will be fine,

143
00:07:37,520 --> 00:07:40,480
Speaker 1: but if our clients suffer, we suffer. And therefore we've

144
00:07:40,520 --> 00:07:43,960
Speaker 1: made the recommendation that that the UK vote to stay

145
00:07:44,080 --> 00:07:47,280
Speaker 1: inside the European Union. Just on behalf of Bloomberg television

146
00:07:47,360 --> 00:07:49,880
Speaker 1: viewers worldwide, Bloomberg radio listeners world I don't want to

147
00:07:49,880 --> 00:07:52,400
Speaker 1: thank you for this opportunity, David. That is Just Staley.

148
00:07:52,440 --> 00:07:54,720
Speaker 1: He is the chief executive officer at Barkley's. We're here

149
00:07:54,720 --> 00:08:00,960
Speaker 1: in midtown Manhattan. That is Bloomberg, with Barkley's new CEO

150
00:08:01,240 --> 00:08:06,520
Speaker 1: Jes Staley suggesting that banks are challenged these days, particularly

151
00:08:06,560 --> 00:08:09,720
Speaker 1: with central banks still struggling to find ways to stimulate

152
00:08:09,760 --> 00:08:13,520
Speaker 1: global economic growth, but that Barclays has a good future

153
00:08:13,680 --> 00:08:17,040
Speaker 1: in front of them. The stock is up by about

154
00:08:17,040 --> 00:08:20,320
Speaker 1: a tenth of a percent since the interview began. I

155
00:08:20,360 --> 00:08:23,240
Speaker 1: thought it was great about it, Mike, was his quiet statement.

156
00:08:23,400 --> 00:08:26,480
Speaker 1: It used to be like being a doctor or a lawyer.

157
00:08:27,800 --> 00:08:31,800
Speaker 1: That is true. I know those younger don't believe it.

158
00:08:32,000 --> 00:08:36,079
Speaker 1: For the madness of the media affecting financial things. That

159
00:08:36,240 --> 00:08:39,880
Speaker 1: was actually like that. The world has changed. It has changed.

160
00:08:40,600 --> 00:08:42,439
Speaker 1: Now it's time for the Bloomberg n j I T

161
00:08:42,600 --> 00:08:44,800
Speaker 1: STEM Report, brought to you by New Jersey Institute of

162
00:08:44,800 --> 00:08:47,800
Speaker 1: Technology partnering with government and industry to apply the university's

163
00:08:47,800 --> 00:08:50,800
Speaker 1: world class research assets to innovate and spur economic growth.

164
00:08:51,080 --> 00:08:53,760
Speaker 1: Learn more at n j I T dot e d U.

165
00:08:54,080 --> 00:08:58,239
Speaker 1: Here's Bob move Michael Hughs was making news in science, Technology, engineering,

166
00:08:58,280 --> 00:09:00,920
Speaker 1: and math. All US drone off riders would for the

167
00:09:00,960 --> 00:09:04,720
Speaker 1: first time have to prove they understand aviation regulations under

168
00:09:04,720 --> 00:09:08,160
Speaker 1: broad legislation introduced in the Senate. The bill setting policy

169
00:09:08,200 --> 00:09:11,839
Speaker 1: for the Federal Aviation Administration includes several new drone provisions,

170
00:09:11,880 --> 00:09:16,040
Speaker 1: including a requirement for unmanned flyers to pass an online test.

171
00:09:16,520 --> 00:09:18,719
Speaker 1: There are signs the European Union is gearing up to

172
00:09:18,720 --> 00:09:22,680
Speaker 1: send Google an antitrust complaint over its Android mobile phone system,

173
00:09:22,800 --> 00:09:24,960
Speaker 1: according to people familiar with the probe, adding to the

174
00:09:24,960 --> 00:09:27,840
Speaker 1: growing list of regulatory woes for the company on the continent.

175
00:09:28,080 --> 00:09:31,360
Speaker 1: The EU has voiced concerns over Google's bundling of apps

176
00:09:31,400 --> 00:09:35,000
Speaker 1: such as maps, YouTube, and Chrome software with Android, questioning

177
00:09:35,000 --> 00:09:38,760
Speaker 1: whether the practice harms independent developers of competing apps. And

178
00:09:38,840 --> 00:09:41,920
Speaker 1: Bloomberg Intelligence reports are ruling in the net neutrality legal

179
00:09:42,000 --> 00:09:45,280
Speaker 1: challenge to rules borrowing I s p s from blocking, degrading,

180
00:09:45,440 --> 00:09:48,640
Speaker 1: or favoring Internet traffic. It's likely before the third quarter

181
00:09:48,760 --> 00:09:51,600
Speaker 1: a T and T, century Link and associations for wired

182
00:09:51,640 --> 00:09:55,360
Speaker 1: and wireless internet service providers have attacked the FCCS net

183
00:09:55,400 --> 00:09:59,160
Speaker 1: neutrality rules in court. And that's this morning's Bloomberg n

184
00:09:59,200 --> 00:10:01,400
Speaker 1: J I T. Stent or Ward Bob, and thank you

185
00:10:01,480 --> 00:10:05,000
Speaker 1: very much. Well, we are now about six minutes away,

186
00:10:05,040 --> 00:10:07,800
Speaker 1: Tom from the ECB decision that everybody is waiting on,

187
00:10:07,800 --> 00:10:10,319
Speaker 1: at least part of it, the rates decision. What is

188
00:10:10,360 --> 00:10:17,160
Speaker 1: the history of headlines? Uh? Coming out at seven, followed

189
00:10:17,240 --> 00:10:19,640
Speaker 1: up by press conference. How does he do that? He

190
00:10:19,880 --> 00:10:22,719
Speaker 1: does the headlines? Obviously the headlines come out and give

191
00:10:22,800 --> 00:10:24,679
Speaker 1: us what the rates are going to be. Just tell

192
00:10:24,720 --> 00:10:28,719
Speaker 1: you what the rates bring. The actual mechanists, the actual mechanism,

193
00:10:28,720 --> 00:10:31,400
Speaker 1: and in this case they are certainly the main refinancing rate.

194
00:10:31,440 --> 00:10:34,280
Speaker 1: Their benchmark rate is at five basis points that hasn't

195
00:10:34,320 --> 00:10:37,160
Speaker 1: been changed in quite a while. It's the deposit rate,

196
00:10:37,240 --> 00:10:41,000
Speaker 1: the rate that banks get charged for keeping money at

197
00:10:41,040 --> 00:10:44,400
Speaker 1: the ECB. They have been maneuvering and that is negative

198
00:10:44,559 --> 00:10:47,760
Speaker 1: thirty basis points. Now the forecasts, they may add another

199
00:10:47,760 --> 00:10:50,640
Speaker 1: tan look across all of Bloomberg Digital Media for our

200
00:10:50,679 --> 00:10:54,320
Speaker 1: coverage today of the economics and the challenges Mr Droggy faces.

201
00:10:54,360 --> 00:10:58,199
Speaker 1: Coming up next the ECB announcement. This is Bloomberg's surveillance,

202
00:11:00,880 --> 00:11:02,720
Speaker 1: but hutting it out of the opening bell, brought you

203
00:11:02,720 --> 00:11:04,800
Speaker 1: by the Jeep Grand Cherokee and the most awarded suv ever.

204
00:11:04,880 --> 00:11:06,840
Speaker 1: The Grand Cherokee continues to raise the bar with its

205
00:11:06,920 --> 00:11:10,280
Speaker 1: luxurious interior and legendary four by four capability. Driving at

206
00:11:10,320 --> 00:11:12,640
Speaker 1: your local Jeep dealer today