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Barclays CEO Staley resigns after Epstein probe

By Rachel Armstrong, Carolyn Cohn and Lawrence White

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Barclays CEO Staley resigns after Epstein probe
© Reuters. FILE PHOTO: Barclays’ CEO Jes Staley arrives at 10 Downing Street in London, Britain January 11, 2018. REUTERS/Peter Nicholls

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By Rachel Armstrong, Carolyn Cohn and Lawrence White

LONDON (Reuters) – Barclays (LON:) chief executive Jes Staley is to step down following a probe by British regulators into his ties with convicted sex offender Jeffrey Epstein, ending a controversial six year reign at the lender marked by his successful backing of its investment bank against an activist investor.

Staley will be replaced as CEO by the bank’s head of global markets C.S. Venkatakrishnan, who on Monday pledged to continue his predecessor’s strategy.

Barclays said it was made aware on Friday evening of the preliminary conclusions from the Financial Conduct Authority and the Prudential (NYSE:) Regulatory Authority’s investigation into Staley’s characterisation to Barclays of his relationship with Epstein and the subsequent description of that relationship in Barclays’ response to the regulator.

“In view of those conclusions, and Mr Staley’s intention to contest them, the Board and Mr Staley have agreed that he will step down from his role as Group Chief Executive and as a director of Barclays,” the bank said.

“It should be noted that the investigation makes no findings that Mr Staley saw, or was aware of, any of Mr Epstein’s alleged crimes, which was the central question underpinning Barclays’ support for Mr Staley following the arrest of Mr Epstein in the summer of 2019.”

Barclays shares fell 2% following the announcement.

Barclays said last year that Britain’s financial regulators were probing links between Staley and Epstein, who killed himself while awaiting trial on sex trafficking offences. Staley has previously said his relationship with Epstein, which he now regrets, ended in late 2015.

The FCA and PRA said in a statement they could not comment further on the Epstein investigation.

Staley told staff in an internal memo seen by Reuters that he did not want his ‘personal response’ to the investigations to be a distraction.

“Although I will not be with you for the next chapter of Barclays’ story, know that I will be cheering your success from the sidelines,” he said.

In a separate internal memo also seen by Reuters, Venkatakrishnan, known as Venkat, told staff the strategy put in place by Staley at Barclays was the “right one”, although he added that he would announce changes to the organisation of the corporate and investment bank in the coming days.

UK regulators launched their investigations into links between Staley and Epstein after JPMorgan (NYSE:) provided them with emails the two exchanged when Staley was the head of JPMorgan’s private bank, the Financial Times reported last year.

The bank’s share price has fallen 9% since Staley became CEO in December 2015.

Barclays fought off a campaign launched by activist investor Edward Bramson in 2018 to have Staley removed. Bramson sold his stake earlier this year.

Britain’s financial regulators and Barclays fined Staley a combined 1.1 million pounds ($1.50 million) in 2018 after he tried to identify a whistleblower who sent letters criticising a Barclays employee.

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Stock Markets

Morgan Stanley: bear market rally to continue

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One of Wall Street’s best-known bears, Michael Wilson, thinks the S&P 500 will rise another 7% before turning down, so the bear market rally will continue for now, writes Market Watch.

After the Dow Jones, S&P 500 and Nasdaq Composite joined their strongest weekly gains since at least May last Friday, Wilson, who is chief strategist and head of U.S. equity markets at Morgan Stanley (NYSE:MS), told clients that there could be another 5% to 7% before the downward trajectory of U.S. stocks resumes during the latest bear market recovery.

Wilson has held a bearish view of the stock market for about 2 years and correctly predicted a sell-off this year.

Wilson explained in a research note sent out to clients on Monday that a pullback in the 38-50% drop in the stock market this year “would not seem like something unnatural, not consistent with the previous bear market rally.”

While growth concerns have triggered a sell-off in commodities and lowered inflation expectations, the fact that the U.S. economy is already slowing and heading toward recession means that any market rally is likely to be short-lived, and U.S. stocks are likely to eventually fall.

Wilson mentioned in the note that the bear market is not over yet, although it may appear otherwise in the next few weeks as the market takes the rate cut as a sign that the Fed can still manage a “soft landing” and prevent a meaningful revision to earnings forecasts.

U.S. stocks rose last week as investors now hope the slowing economy and falling commodity prices may inspire the Fed to raise interest rates less sharply. Federal funds futures, a derivative used by investors to bet on the pace of the Fed’s monetary policy changes, estimate with a high probability that the Fed will be forced to start cutting interest rates again as soon as next summer.

They also consider the lower peak in the federal funds rate: it will peak around 3.5% at the end of 2022 instead of 3.75% just a couple of weeks ago. Wilson also pointed out the drop in Treasury yields: the 10-year Treasury bond yield went from 3.230% to a low of 3.07% on Friday before rebonding again on Monday.

Wilson expects the S&P 500 index to fall to around 3,400 points if the U.S. Federal Reserve manages to get a “soft landing” for the economy — which Fed Chairman Jerome Powell said last week would be “a very difficult thing to do.”

Wilson expects that if the U.S. economy plunges into recession, the S&P 500 index will fall to around 3,000 points. In any case, Wilson believes that U.S. stocks are still highly valued because the risk premium — that is, the measure of compensation that investors receive for the extra risk of owning stocks instead of bonds — remains about 300 basis points higher than the 10-year Treasury bond yield, which is considered a “risk-free rate.” 



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Easing chip shortages to help Volkswagen in H2 – CEO

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© Reuters. FILE PHOTO: Volkswagen logo is pictured at the 2022 New York International Auto Show, in Manhattan, New York City, U.S., April 13, 2022. REUTERS/Brendan McDermid/File Photo

BERLIN (Reuters) – Volkswagen (ETR:VOWG_p) sees a strong second half of 2022 and expects progress in catching up with rival Tesla (NASDAQ:TSLA) as easing chip shortages start to offset supply chain bottlenecks and rising costs, the carmaker’s CEO said on Tuesday.

“We are earning more than ever,” Chief Executive Herbert Diess said at a works meeting, adding Volkswagen is ramping up electric vehicle volumes in its biggest markets in Germany and China thanks to easing semiconductor shortages.

This should allow the carmaker to narrow the Volkswagen-Tesla gap this year and meet its goal of becoming market leader by 2025 if it seizes the moment while the U.S. electric car maker burns cash on large investments, the CEO said.

“Elon (Musk) has to ramp up two highly complex factories in Austin and Gruenheide at the same time – as well as expand production in Shanghai. That’s going to take strength out of him,” Diess said.

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Stock Markets

Reliance Chairman Mukesh Ambani steps down as director of telecom arm

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© Reuters. FILE PHOTO: Mukesh Ambani, Chairman and Managing Director of Reliance Industries, arrives to address the company’s annual general meeting in Mumbai, India July 5, 2018. REUTERS/Francis Mascarenhas

BENGALURU (Reuters) – Reliance Industries Chairman Mukesh Ambani has stepped down as director of Reliance Jio Infocomm Ltd, the conglomerate’s telecom arm said on Tuesday.

Reliance Jio said https://refini.tv/3Nrs773 it has appointed Mukesh’s son and non-executive director Akash Ambani as the chairman of its board. Akash has been involved with the telecom unit since its launch in late 2016, where he started as a director.

India’s telecoms sector had been upended after the entry of Jio, which triggered a price war that forced some rivals out of the market and turned profits into losses.

Jio, which started out offering mobile teleservices, has been aggressively investing in services like internet broadband and forging ties with handset makers to launch low-cost smartphones and providing 5G services.

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