WEBVTT - Exclusive Conversation with Barclays CEO C.S. Venkatakrishnan 0:00:00.240 --> 0:00:01.400 Dave Francine. 0:00:01.600 --> 0:00:03.600 Now we usually actually start with a bit of banter 0:00:03.640 --> 0:00:04.960 at the top of the show, but we have such 0:00:04.960 --> 0:00:07.520 a big guest today, we're skipping the banter and just 0:00:07.600 --> 0:00:08.479 getting straight to it. 0:00:08.560 --> 0:00:10.440 That's absolutely right. Let's get started. 0:00:11.720 --> 0:00:12.880 I'm Francine Lacqua. 0:00:12.680 --> 0:00:14.560 And I'm David Merritt, and this is. 0:00:14.480 --> 0:00:17.840 In the City, Bloomberg's podcast, connecting you to the conversations 0:00:17.880 --> 0:00:19.120 at the heart of the City of London. 0:00:19.160 --> 0:00:22.640 And this week our guest is Barklay's chief executive officer, 0:00:22.960 --> 0:00:25.919 cs ven Kata Krishnan, joining us for I think his 0:00:26.000 --> 0:00:26.920 podcast debut. 0:00:27.320 --> 0:00:28.680 It is my podcast debut. 0:00:28.800 --> 0:00:30.960 Yes, thank you, well, we are very honored to have 0:00:31.000 --> 0:00:35.320 you on your podcast. Dut congratulations for joining in the City. 0:00:35.320 --> 0:00:39.000 We're sitting in New York. We have Francine sitting up 0:00:39.040 --> 0:00:43.840 late in London joining the conversation. Let's just start right 0:00:43.840 --> 0:00:45.760 in with the big question. You know, the headlines at 0:00:45.800 --> 0:00:48.360 the moment in the markets are all about nerves. I 0:00:48.400 --> 0:00:50.920 was just reading a headline on Bloomberg jitters in Wall Street, 0:00:51.360 --> 0:00:54.360 whether it's the bomb market, interest rates, the stock market. 0:00:54.360 --> 0:00:56.600 There's a lot of nerves around a recession and if 0:00:56.600 --> 0:00:57.640 it's coming when it's coming. 0:00:58.240 --> 0:00:59.400 How are you feeling at the moment? 0:01:00.640 --> 0:01:05.479 So I do think that of rate moves has caused 0:01:05.520 --> 0:01:09.000 some amount of tension among market participants. I would like 0:01:09.040 --> 0:01:12.119 to take the longer view on this. I think what 0:01:12.200 --> 0:01:16.280 you've seen over the last two years is obviously a 0:01:16.319 --> 0:01:19.560 fairly substantial rise in short term rates and long term 0:01:19.640 --> 0:01:23.640 rates have adjusted accordingly. In the major economies of the world, 0:01:23.720 --> 0:01:26.760 I would say the US has been the most advanced 0:01:26.760 --> 0:01:30.000 in the rate rise. The UK now is not far behind, 0:01:30.080 --> 0:01:34.360 Europe is still lagging. What that has done is addressed 0:01:34.560 --> 0:01:38.960 the immediate headline issue of inflation. The next question, which 0:01:39.040 --> 0:01:42.360 is something many of us have been asking about for 0:01:42.400 --> 0:01:45.399 some time, is how does the real economy, How do 0:01:45.560 --> 0:01:50.120 real businesses adjust to a world in which interest rates 0:01:50.160 --> 0:01:53.400 are higher and higher for longer. Because I think the 0:01:53.440 --> 0:01:56.080 one thing people do not question is that we will 0:01:56.120 --> 0:01:58.160 see call it four and a half ish to five 0:01:58.760 --> 0:02:01.600 percent ten year rates which have a currency you're talking about, 0:02:01.680 --> 0:02:07.200 for some time. And as that settles in, people worry 0:02:07.280 --> 0:02:10.960 about what employment will do, and they're also at the 0:02:10.960 --> 0:02:12.919 same time there's a little bit worry on the long 0:02:13.000 --> 0:02:17.399 term side as to what's going to ultimately happen with inflation. 0:02:18.080 --> 0:02:21.440 I think it's just as six months ago or eight 0:02:21.480 --> 0:02:24.560 months ago, it was too soon to declare victory, it's 0:02:24.600 --> 0:02:25.800 too soon to declare defeat. 0:02:26.000 --> 0:02:27.720 Right, So you're not looking to you jittery. I mean 0:02:27.720 --> 0:02:30.000 you're looking quite relaxed, and you've got an amazing rigul 0:02:30.080 --> 0:02:32.280 side seat in terms of how companies are doing, how 0:02:32.320 --> 0:02:37.040 the consumer is doing. Yeah, you seem fairly sanguine about 0:02:37.040 --> 0:02:38.520 where we're all. 0:02:38.040 --> 0:02:41.639 Look one in as a big bank CEO, you're never 0:02:41.800 --> 0:02:45.440 sanguine because you're always worried about what might go wrong. 0:02:46.320 --> 0:02:48.480 But to think about what might go wrong does not 0:02:48.600 --> 0:02:51.280 mean it will go wrong or it is likely to 0:02:51.320 --> 0:02:54.120 go wrong. I mean we should all worry a little 0:02:54.120 --> 0:02:56.720 about if higher rates do get substantially higher, and what 0:02:56.760 --> 0:02:57.920 happens to business models. 0:02:58.080 --> 0:02:58.639 But at this. 0:02:58.680 --> 0:03:06.079 Stage, I think we have to see employment and watch employment. Employment, 0:03:06.320 --> 0:03:10.000 or rather a low unemployment rate, is the most critical 0:03:10.040 --> 0:03:13.440 measure of consumer health because as long as people have jobs, 0:03:13.480 --> 0:03:17.240 they will spend. And I'm hopeful that employment continues to 0:03:17.280 --> 0:03:20.919 hold up for various structural and other reasons on both 0:03:20.960 --> 0:03:21.840 sides of the Atlantic. 0:03:22.440 --> 0:03:24.280 Venqatte, do you worry a little bit more about the 0:03:24.400 --> 0:03:26.800 US economy. We're talking about a credit crimeter. It's not 0:03:26.880 --> 0:03:29.840 easy out there, and I know, you know, things are 0:03:29.840 --> 0:03:32.000 looking better certainly than they were six months ago, but 0:03:32.080 --> 0:03:34.200 you've been in charge for two years. It's been a 0:03:34.320 --> 0:03:36.360 roller coaster over two years. For the market. 0:03:37.280 --> 0:03:39.600 It has been a roller coaster for two years. I 0:03:39.640 --> 0:03:43.360 think the most important thing coming into this and coming 0:03:43.400 --> 0:03:46.960 into this rate rise is consumers on both sides of 0:03:46.960 --> 0:03:50.480 the Atlantic have been very, very cautious about their spending. 0:03:50.960 --> 0:03:54.440 So one simple statistic in the UK, where obviously it's 0:03:54.480 --> 0:03:56.800 a more densely banked system and we see a fair 0:03:56.840 --> 0:03:59.120 amount of the payments that go in through the system, 0:03:59.360 --> 0:04:02.400 But one simple statistic in the UK is that over 0:04:02.440 --> 0:04:05.440 the last year, whatever the inflation print has been over 0:04:05.440 --> 0:04:08.480 a previous twelve month period as high as a ten 0:04:08.520 --> 0:04:11.240 percent and you know, down to around six percent more recently, 0:04:12.480 --> 0:04:16.440 the trailing twelve months spending growth that we saw in 0:04:16.480 --> 0:04:19.040 our own debit and credit card systems was half the 0:04:19.120 --> 0:04:22.559 rate of inflation. So prices go up ten percent, people 0:04:22.640 --> 0:04:26.039 spending goes up five percent. Part of that is economizing 0:04:26.920 --> 0:04:29.440 going down market in terms of where they shop, what 0:04:29.520 --> 0:04:32.320 they shop for, how they shop, and part of it 0:04:32.360 --> 0:04:37.400 is cutting out certain more expensive kinds of expenditure, so 0:04:38.400 --> 0:04:43.679 discretionary spending on either holidays or big ticket items. They've 0:04:43.720 --> 0:04:46.040 done that while they've kept their jobs. It's a good 0:04:46.080 --> 0:04:49.400 thing now. In part they've had to do that because 0:04:49.600 --> 0:04:53.200 their paycheck has been eaten up by two other things. 0:04:53.320 --> 0:04:56.560 Energy price inflation, which went up very high, came down. 0:04:56.640 --> 0:04:58.520 Of course, oil prices are going up again just a 0:04:58.520 --> 0:05:01.880 little now, and then at the same time, especially in 0:05:01.920 --> 0:05:05.560 the UK, a mortgage rate rise. Now, the US market 0:05:05.640 --> 0:05:08.320 responds less to that. I mean, there's just it affects 0:05:08.320 --> 0:05:11.360 the price of houses here and affects how many people 0:05:11.400 --> 0:05:13.919 buy new homes. But because we have more of a 0:05:13.960 --> 0:05:16.919 fifteen and thirty year rate market in the US, it 0:05:16.960 --> 0:05:20.720 affects individual is less. But people have been adjusting, and 0:05:20.760 --> 0:05:21.760 that is the hopeful sign. 0:05:22.560 --> 0:05:25.640 Do you worry about a credit crunch anywhere, Venkattie. After 0:05:25.680 --> 0:05:27.200 a couple of more months of this, or a couple 0:05:27.240 --> 0:05:31.040 more quarters, people can't afford to pay the bills. People 0:05:31.400 --> 0:05:33.839 are struggling to repay some of their credit card. 0:05:34.400 --> 0:05:35.719 I'm not worried about it. 0:05:36.520 --> 0:05:39.840 As long as energy prices and interest rates remain at 0:05:39.839 --> 0:05:42.240 these rough levels. I think people have adjusted to that. 0:05:42.920 --> 0:05:45.479 So it's sustainable at this sort of level you think 0:05:45.560 --> 0:05:48.760 in terms of credit quality, Yes, it's a very elevated 0:05:48.839 --> 0:05:49.360 level right now. 0:05:49.440 --> 0:05:51.839 Right, it's an elevated level where people have made the 0:05:51.839 --> 0:05:55.919 financial adjustment. The key to it is employment. People have 0:05:55.960 --> 0:05:59.240 to have their jobs. As long as jobs continue to 0:05:59.279 --> 0:06:02.680 be firm, people will adjust their expenditure levels to match this. 0:06:03.000 --> 0:06:03.160 Right. 0:06:03.520 --> 0:06:05.440 You know we look for kind of warning signs, don't 0:06:05.440 --> 0:06:08.200 we read flashing signs in the jobs market. Blimberg has 0:06:08.200 --> 0:06:11.920 an interesting tracker from Reed in terms of job vacancies. Now, 0:06:12.200 --> 0:06:15.680 James Reed has said that their indicators are never wrong 0:06:15.720 --> 0:06:18.520 about recession. It started to flash a bit red. That's 0:06:18.520 --> 0:06:20.680 about employment in Britain and that's a bit of a 0:06:20.760 --> 0:06:23.360 leading indicator postings for things like that. Are you seeing 0:06:23.520 --> 0:06:27.120 in your business any red flashing bulbs that we need 0:06:27.160 --> 0:06:27.880 to be worried about. 0:06:28.920 --> 0:06:33.280 I think what we see in the UK more companies 0:06:33.400 --> 0:06:38.160 are talking about efficiency and they're talking about quote unquote 0:06:38.240 --> 0:06:41.200 right sizing. At the Conservative Party conference in Manchester, the 0:06:41.279 --> 0:06:45.160 Chancellor of the Exchequer spoke about freezing civil service recruitment. 0:06:45.839 --> 0:06:48.840 So those are signs we have to see how they 0:06:48.920 --> 0:06:49.680 build or hear. 0:06:49.600 --> 0:06:52.800 That, and I think, right, okay, the government is putting 0:06:52.839 --> 0:06:56.040 back on hiring. You know, do you think corporate Britain 0:06:56.040 --> 0:06:57.880 and corporate America here those signals and think we've got 0:06:57.880 --> 0:06:59.120 to slow down, are hiring as well. 0:06:59.160 --> 0:07:01.279 But I think people companies have been thinking about it 0:07:01.320 --> 0:07:03.520 for quite some time, and you saw it in tech 0:07:03.640 --> 0:07:05.400 very earlier this year, much earlier this year. 0:07:05.400 --> 0:07:08.080 And you're thinking about our parties, Well. 0:07:07.880 --> 0:07:12.600 We always look at the efficiency of our operations and 0:07:13.320 --> 0:07:14.960 so yes, we do think about it as well. 0:07:15.360 --> 0:07:17.680 You're way too optimistic. I mean, Dave and I speak 0:07:17.720 --> 0:07:21.040 all the time, and I'm usually the optimist, and you're 0:07:21.080 --> 0:07:24.840 even more optimistic than me. I don't see who's hiring 0:07:25.600 --> 0:07:28.000 when you look at businesses. When you look at you 0:07:28.000 --> 0:07:30.920 don't talk about the government maybe hiring less. I just 0:07:30.960 --> 0:07:33.040 don't understand how we're going to grow from here. 0:07:33.680 --> 0:07:38.080 So you're right that as people look at hiring itself, 0:07:39.000 --> 0:07:42.320 that in the very very short term everybody is a 0:07:42.320 --> 0:07:46.480 little more cautious. The two things to keep in mind 0:07:46.840 --> 0:07:49.720 in the UK, to begin with, is that there was 0:07:49.760 --> 0:07:53.960 a real structural supply shock in labor post to Brexit, 0:07:54.600 --> 0:07:57.600 right where the labor four shrunk and it wasn't that 0:07:57.760 --> 0:08:00.000 long ago we were talking about people and in fact 0:08:00.040 --> 0:08:02.080 the Chancellor of the Exchequer spoke about it again in 0:08:02.720 --> 0:08:06.600 the UK. We were talking about people who were retiring 0:08:06.640 --> 0:08:09.480 early and the impact it's having on benefits, people who 0:08:09.520 --> 0:08:11.800 should be able to work but we're not willing. 0:08:11.520 --> 0:08:12.760 To work, resignation and all. 0:08:12.800 --> 0:08:15.119 Yea. So it wasn't that long ago we were talking 0:08:15.120 --> 0:08:18.560 about it. So I think our mood gets amplified one 0:08:18.560 --> 0:08:21.400 way or the other, right, And so I wouldn't sort 0:08:21.400 --> 0:08:24.600 of say so, Francine, I rarely would disagree with you, 0:08:25.000 --> 0:08:27.880 So I wouldn't say that I'm optimistic. Perhaps I'm a 0:08:27.920 --> 0:08:30.440 little calmer than I should be, so. 0:08:30.680 --> 0:08:33.800 Very very calm indeed't it? What about the whole banking 0:08:34.000 --> 0:08:36.320 industry as a whole? In your industry, I mean, as 0:08:36.320 --> 0:08:38.760 Fancy said, it's been an unbelievable couple of years. But 0:08:38.840 --> 0:08:40.880 you know who would have predicted Credit Swiss would cease 0:08:40.960 --> 0:08:43.640 to exist, to've had the SVB de Bacala this year. 0:08:43.720 --> 0:08:46.040 I mean, how does the industry feel for you at 0:08:46.080 --> 0:08:49.000 the moment? It feels a little bit like it's perilous 0:08:49.040 --> 0:08:50.360 times for banks. 0:08:50.440 --> 0:08:53.920 It depends on where in the industry. You asked that question, 0:08:54.720 --> 0:08:58.760 and I think the large banks, the megabanks, banks like Barclay's, 0:08:59.480 --> 0:09:02.720 the gesfees, the money center banks in the US have 0:09:02.920 --> 0:09:08.800 all spent a number of years improving their capital, increasing 0:09:08.960 --> 0:09:13.959 their liquidity, managing their risks more carefully, and we all 0:09:14.040 --> 0:09:17.400 feel in a better place because of that. Now, the 0:09:17.480 --> 0:09:20.640 latest rules on Basel three point one caused some amount 0:09:20.679 --> 0:09:23.960 of nerves among people, but it's coming at a time 0:09:24.000 --> 0:09:26.280 when we are all well capitalized, and none of the 0:09:26.360 --> 0:09:29.520 very big banks were being called into question this year. 0:09:30.280 --> 0:09:33.360 What you had was therefore other pockets. 0:09:34.280 --> 0:09:37.839 One is fintech, where obviously there was a business model 0:09:37.840 --> 0:09:40.079 which was based on cheap money, which is getting tested 0:09:40.520 --> 0:09:44.840 and they've got to show real profitability. And ultimately size 0:09:44.880 --> 0:09:46.720 catches up with you in some of these smaller firms, 0:09:46.760 --> 0:09:49.880 because do you have the ability to put in all 0:09:49.960 --> 0:09:51.839 the systems, do you put in all the checks and 0:09:51.920 --> 0:09:55.920 balances in terms of KYC money laundering and so on? 0:09:55.960 --> 0:09:59.520 And you see that about certain firms. And then in 0:09:59.559 --> 0:10:04.079 the UA regional banks where they were a certain size 0:10:04.120 --> 0:10:05.960 now where if they creep up to about one hundred 0:10:05.960 --> 0:10:09.319 billion dollars, they get caught in the regulatory net, and 0:10:09.440 --> 0:10:11.800 of course there was an acid liability issue which came 0:10:12.000 --> 0:10:16.480 to the fourth in February March. Credit suite occupies a 0:10:16.520 --> 0:10:19.360 different part of this universe. It was a bank that 0:10:19.480 --> 0:10:23.520 was having difficulty coming into this year. And if you 0:10:23.559 --> 0:10:26.600 had said to people in January of this year that 0:10:26.720 --> 0:10:29.360 credit switee might have difficulty in twenty twenty three, I 0:10:29.360 --> 0:10:31.760 think people would have accepted it because we knew that 0:10:31.800 --> 0:10:33.720 they were dealing with deep structural issues. 0:10:34.200 --> 0:10:35.520 The others were more surprising. 0:10:36.400 --> 0:10:39.760 If you think about your business then now as it stands, 0:10:40.440 --> 0:10:42.679 where are you most concerned about? You know, the IPO 0:10:42.760 --> 0:10:45.000 market has been pretty deadly. You did get a great 0:10:45.040 --> 0:10:49.040 mandate on ARM, as we did, but what does the 0:10:49.080 --> 0:10:51.720 pipeline look like? I mean, particularly in investment banking. 0:10:51.960 --> 0:10:56.120 Yeah, I mean there is a sentimentality or sentiment driven 0:10:56.240 --> 0:10:59.520 aspect to that pipeline. I would have said a month 0:10:59.559 --> 0:11:03.720 ago in early September, especially with ARM Instacart coming, people 0:11:03.720 --> 0:11:08.360 who are a little hopeful. Interest rates have risen since then, 0:11:08.960 --> 0:11:11.800 and those IPOs themselves have traded off a bit from 0:11:11.840 --> 0:11:15.319 their initial peak, so people are cautious about the IPO market. 0:11:15.440 --> 0:11:17.960 Sentiment has to come back for that because it's a 0:11:17.960 --> 0:11:20.640 fundamental driven thing in terms of the build up to 0:11:20.760 --> 0:11:23.760 the decision to do an IPO, but the timing is 0:11:23.840 --> 0:11:28.640 sentiment driven. So I think if you look at it overall, 0:11:29.200 --> 0:11:31.960 there is a challenge in the banking environment. Number One, 0:11:32.679 --> 0:11:36.920 you've got deal flow which increased very slightly at the 0:11:36.920 --> 0:11:41.480 start of September, still looking that the revival is looking 0:11:41.520 --> 0:11:45.680 a little further away. I'm still hopeful by the way 0:11:46.080 --> 0:11:48.520 that if things settle down, deal flows come back. So 0:11:48.559 --> 0:11:50.880 I think you need to look through this period. You've 0:11:50.880 --> 0:11:54.920 got interest rates which are peaking for a bank, it 0:11:54.920 --> 0:11:57.720 would lead to a peaking in net interest margins, and 0:11:57.760 --> 0:12:02.240 then market volatility which is there but less than it 0:12:02.320 --> 0:12:05.000 used to be, which will obviously impact the way you 0:12:05.080 --> 0:12:08.840 think longer term about trading revenues. All this means is, 0:12:09.000 --> 0:12:12.480 I think some stability in bank earnings as opposed to 0:12:13.160 --> 0:12:16.880 a shrinkage or tremendous growth, right, and for growth to 0:12:16.920 --> 0:12:18.640 come back, one of these things has to reverse. 0:12:19.920 --> 0:12:22.760 What does that mean vencav for hiring and firing. So 0:12:23.160 --> 0:12:25.400 I know there's a number of also big Wall Street 0:12:25.400 --> 0:12:28.960 banks that are going through downsizing. I don't know how 0:12:29.360 --> 0:12:32.280 quickly you can see those green shoots coming back into 0:12:32.320 --> 0:12:34.080 hiring for certain parts of the bank. 0:12:34.800 --> 0:12:37.000 So I think again, despends on the part of the 0:12:37.040 --> 0:12:41.079 bank you're looking at. If you're looking at the fundamental expense, 0:12:41.679 --> 0:12:46.439 the fundamental hiring which all of us do in technology, 0:12:46.559 --> 0:12:51.920 in productivity enhancement and investing in our systems and making 0:12:52.000 --> 0:12:55.679 the place run better, that will continue to happen. If 0:12:55.720 --> 0:13:01.320 you look at hiring related to trend actions, especially in 0:13:01.360 --> 0:13:06.320 the investment banking state, it's probably platetered and uh it's 0:13:06.360 --> 0:13:07.800 it's you know, you're going to have to wait to 0:13:07.800 --> 0:13:10.920 see deal volume come before people build that up. And 0:13:11.000 --> 0:13:12.959 I think on the market side it's also going to 0:13:13.000 --> 0:13:16.720 be stable. So I think what I would say is stability, 0:13:16.800 --> 0:13:17.360 not growth. 0:13:18.880 --> 0:13:20.560 So you were telling me earlier you just got back 0:13:20.600 --> 0:13:22.920 from the Tory conference in Manchester. You know a lot 0:13:22.920 --> 0:13:26.040 of talk there, you know about the growth agenda, and 0:13:26.080 --> 0:13:28.000 I read with interest your op ed in the Times 0:13:28.000 --> 0:13:30.720 about a bold agenda being needed for Britain, right, and 0:13:30.760 --> 0:13:32.200 I think, what do we hear for the Prime minister 0:13:32.240 --> 0:13:35.360 this week? We heard a strategy based around scrapping a 0:13:35.440 --> 0:13:39.720 rail line, increasing the smoking age and tweaking a levels. 0:13:39.800 --> 0:13:41.880 Is that the sort of vision that Britain needs to 0:13:42.040 --> 0:13:43.760 kind of match the US levels of growth. 0:13:45.120 --> 0:13:46.520 Well, I think there was other things. 0:13:48.280 --> 0:13:50.480 There were other things that that the Prime Minister and 0:13:50.520 --> 0:13:56.520 the and the Chancellor said, including increasing investment into the UK, 0:13:57.320 --> 0:14:02.080 investment in important technology and sectors where the UK has 0:14:02.080 --> 0:14:06.160 a comparative advantage or a competitive advantage, including the life sciences, 0:14:06.559 --> 0:14:11.360 entertainment and obviously the digital economy. You know, some of 0:14:11.360 --> 0:14:14.960 the important chip companies and AI companies are headquartered in 0:14:14.960 --> 0:14:16.960 Britain and the lifetimes. 0:14:16.960 --> 0:14:18.240 Yeah, so I think. 0:14:18.760 --> 0:14:22.200 But equally so, I think they talk about that investment 0:14:22.280 --> 0:14:26.120 and they talk about the increase or the need to 0:14:26.280 --> 0:14:29.040 increase the equity risk culture in the UK, which is 0:14:29.080 --> 0:14:31.320 I think a very important thing to speak about. I 0:14:31.360 --> 0:14:33.920 should also say we spoke about the Tory conference. I 0:14:33.920 --> 0:14:37.600 think the Labor conference is coming up. The difference between 0:14:37.640 --> 0:14:40.880 Tory and Labor in the UK in these issues is 0:14:40.920 --> 0:14:43.320 not as wide as it used to be. Yeah, I mean, 0:14:43.360 --> 0:14:46.680 I think in our lifetimes we have never seen such 0:14:46.680 --> 0:14:50.240 a small difference between the way labor thinks, the central 0:14:50.440 --> 0:14:53.520 part of the Labor doctrine and the Tory doctrine. And 0:14:53.560 --> 0:14:55.920 that's actually a good thing for the UK. Because it 0:14:55.960 --> 0:14:57.120 diminishes political risk. 0:14:59.760 --> 0:15:02.320 Are you you bullish on the city of London again? 0:15:02.520 --> 0:15:06.760 There has been so much I guess outpouring of downbeat 0:15:06.800 --> 0:15:08.960 news that a lot of people are saying, look, the 0:15:09.040 --> 0:15:12.280 UK is now turning a corner that things can only 0:15:12.360 --> 0:15:15.400 look up. Do you agree with that assessment or were 0:15:15.400 --> 0:15:17.880 we always too tough on the ukn city of London. 0:15:19.560 --> 0:15:22.760 I think there's a natural tendency to be a little 0:15:22.800 --> 0:15:26.120 tough on the city of London. I think certainly there 0:15:26.160 --> 0:15:29.720 was a lot of sentiment that happened with Brexit, and 0:15:29.800 --> 0:15:33.640 you know, there's a natural readjustment of the financial operations 0:15:33.640 --> 0:15:36.360 of companies from London to Europe because they couldn't serve 0:15:36.400 --> 0:15:40.160 Europe from London. But that is not to overlook the 0:15:40.160 --> 0:15:43.600 many advantages that the UK have. Everybody speaks about them 0:15:44.000 --> 0:15:48.360 soft and hard in terms of workforce, education, rule of law, 0:15:48.600 --> 0:15:51.920 and then there's the professional disciplines that support a banking industry. 0:15:52.680 --> 0:15:56.600 Most important to me above all of these things is 0:15:56.640 --> 0:16:00.000 the approach of the UK public, the UK institutions, the UN, 0:16:00.040 --> 0:16:04.440 UK regulators, in the UK government to the financial industry. 0:16:05.120 --> 0:16:09.040 The financial industry in the UK is a source of strength. 0:16:09.560 --> 0:16:13.000 It is a critical competitive advantage to the country. Barclays 0:16:13.520 --> 0:16:16.800 brings in two billion pounds of foreign exchange jarnings every 0:16:16.880 --> 0:16:22.360 year into the UK because we sell UK financial services globally. Now, 0:16:22.840 --> 0:16:26.240 the love hate relationship in the past has been driven 0:16:26.280 --> 0:16:32.000 probably more by bankers not behaving as well as they should. 0:16:32.480 --> 0:16:35.160 I certainly hope the industry has put it far behind 0:16:35.200 --> 0:16:38.840 it and I think a well run, well regulated industry, 0:16:39.480 --> 0:16:42.320 regulated both by the pr in the FCA and the Treasury, 0:16:42.960 --> 0:16:46.920 and well managed by the participants in the industry of 0:16:47.000 --> 0:16:51.320 which we are one should lead to a greater amount 0:16:51.320 --> 0:16:54.640 of cooperation between the City of London and the government, 0:16:55.320 --> 0:16:58.880 working together on common goals to advance growth in the 0:16:58.880 --> 0:17:01.840 country and in investment into the sectors which need them. 0:17:02.080 --> 0:17:04.040 That's what my article in the terms is about. 0:17:03.960 --> 0:17:06.320 Right, right, And when you interviewed the Chancellor, you told 0:17:06.320 --> 0:17:08.920 me sat the other side of the desk in Manchester, 0:17:09.040 --> 0:17:11.280 do you have faith that he has got the right 0:17:11.280 --> 0:17:13.440 agenda for this pro business stances, because you know, the 0:17:13.520 --> 0:17:15.960 last few years have not been great for the relations 0:17:16.000 --> 0:17:19.240 between particular Conservative Party and the city in business more broadly. 0:17:19.400 --> 0:17:21.600 Yeah, I mean, look, I think you always are going 0:17:21.640 --> 0:17:26.000 to have voices on either side of this. But I 0:17:26.119 --> 0:17:28.920 look in two ways. I look in main at what 0:17:29.000 --> 0:17:33.000 the sort of the main part of opinion is and 0:17:33.200 --> 0:17:35.640 the centrality of opinion, if you like, the central part 0:17:35.640 --> 0:17:38.400 of the distribution, and that I think is very friendly, 0:17:38.800 --> 0:17:41.240 and it's friendly on the Tory side and it's friendly 0:17:41.280 --> 0:17:42.200 on the Labor side. 0:17:42.920 --> 0:17:43.920 So that was to a point. 0:17:43.960 --> 0:17:47.120 You know that the convergence of the two parties really 0:17:47.160 --> 0:17:49.600 whoever wins if we get an election yet next year, 0:17:49.640 --> 0:17:52.280 which it seems like we will, the city doesn't really 0:17:52.320 --> 0:17:54.320 mind who wins, just as long as the kind of 0:17:54.320 --> 0:17:55.280 policies are continued. 0:17:56.720 --> 0:17:59.240 Yeah, I think the city should welcome the state of 0:17:59.280 --> 0:18:03.840 affairs on the confluence in thinking on economic policy, the 0:18:03.960 --> 0:18:05.560 role of the financial industry in. 0:18:05.520 --> 0:18:07.600 The UK and the role of growth. 0:18:07.840 --> 0:18:11.000 Now, obviously there are differences in Labor and between Labor 0:18:11.040 --> 0:18:13.240 and Tory on various other things, not my job to 0:18:13.280 --> 0:18:17.360 get into that, but on the central aspect of economic policy, 0:18:17.960 --> 0:18:21.560 financial regulation, the importance of the financial industry, I think 0:18:21.600 --> 0:18:24.320 they're far closer together than they are a part. 0:18:26.119 --> 0:18:28.760 But when kat, what do you need from government right 0:18:28.800 --> 0:18:32.760 now to make your life easier? It must be sometimes frustrating, 0:18:32.880 --> 0:18:36.200 right to see valuations of Barclays or other big banks, 0:18:36.720 --> 0:18:39.240 and then you look at other companies that probably didn't 0:18:39.280 --> 0:18:43.080 even break a sweat or actually did any profit with 0:18:43.320 --> 0:18:46.480 crazy valuations because they're in a different sector. So what 0:18:46.600 --> 0:18:49.320 will make your job easier in two years from now? 0:18:49.640 --> 0:18:53.600 So I actually don't think that's government's job. I think 0:18:53.680 --> 0:18:57.879 it's our job as bankers, as people who run companies, 0:18:58.520 --> 0:19:02.800 to produce good return for our shareholders, to distribute those 0:19:02.840 --> 0:19:04.840 returns and have them believe that we can do so, 0:19:05.440 --> 0:19:09.320 and if we do that job well, they will reward us. Right, 0:19:09.640 --> 0:19:12.240 this is much more in our hands than anybody else's. 0:19:12.440 --> 0:19:14.359 So in that instance, I. 0:19:16.240 --> 0:19:20.080 And are you frustrated? And get are you frustrated about valuations? 0:19:20.119 --> 0:19:24.280 I mean, banks are so complex, especially in regulation, and 0:19:24.359 --> 0:19:28.240 sometimes the valuations may not match up. Is that a frustration? 0:19:28.359 --> 0:19:29.200 Do you think about that? 0:19:29.960 --> 0:19:30.160 Look? 0:19:30.200 --> 0:19:33.560 I spent a lot of time thinking about valuations, certainly 0:19:33.560 --> 0:19:35.720 of Barclays, and of course I look at the industry. 0:19:35.960 --> 0:19:39.160 It's a difficult industry. There is a risk premium attached 0:19:39.160 --> 0:19:43.760 to this industry, both in terms of our exposure to 0:19:43.840 --> 0:19:47.959 the macroeconomy and what people believe, especially parts of our 0:19:48.000 --> 0:19:50.720 business model, the investment banking parts of the business model. 0:19:51.200 --> 0:19:53.239 How they think we are vulnerable to the ups and 0:19:53.320 --> 0:19:56.120 downs of markets. We try to run our business well. 0:19:56.160 --> 0:19:59.000 We try to manage our risk carefully. It's our job 0:19:59.080 --> 0:20:03.040 to continue to great returns reliably, and then shareholders will 0:20:03.080 --> 0:20:06.080 reward us. Will you get frustrated from time to time? 0:20:06.160 --> 0:20:09.560 You can, but you know we've got a job to do, 0:20:10.080 --> 0:20:13.760 and if we do the job, I'm certain over time 0:20:13.800 --> 0:20:14.560 we'll get rewarded. 0:20:15.119 --> 0:20:17.320 Venkette, I know you're focused a lot on green tech, 0:20:17.520 --> 0:20:20.199 and it's something that you know is close to you. 0:20:20.280 --> 0:20:23.679 But how do you see that developing? There's there's seems 0:20:23.680 --> 0:20:27.080 to be a bifurcation about on countries but also companies 0:20:27.080 --> 0:20:29.879 that still want to be ESG friendly and green. Is 0:20:29.920 --> 0:20:33.680 this now more of a difficult question than almost two 0:20:33.720 --> 0:20:34.160 years ago? 0:20:34.720 --> 0:20:37.679 I don't think it is. I think I think the 0:20:37.760 --> 0:20:41.840 train left the station. I think we are moving towards 0:20:41.920 --> 0:20:45.400 a world which will align to net zero. We Barclays 0:20:45.440 --> 0:20:48.240 hope to be aligned by twenty to fifty. Some companies 0:20:48.280 --> 0:20:50.600 will do sooner, some will do later. We think we 0:20:50.640 --> 0:20:52.840 will move towards that world. When that happens, I do 0:20:52.920 --> 0:20:57.600 not know, but the factors that are driving. It will happen. 0:20:57.880 --> 0:21:03.080 People will emit in greenhouse gases. Over time, people will 0:21:03.160 --> 0:21:08.440 use fossil fuels less. Companies will invest more in renewables. 0:21:08.480 --> 0:21:15.560 Companies will invest more in either capturing carbon or making 0:21:15.600 --> 0:21:18.200 more efficient the use of fossil fuel so that less 0:21:18.200 --> 0:21:21.320