Barclays says search for new chief still ongoing, despite reports

Reports suggesting Barclays was set to name US investment banker Jes Staley as its new chief over the coming fortnight weighed on the lender’s shares, prompting a reaction.

The lender responded to the press speculation in the afternoon, saying in a statement that “the process of appointing a new Group Chief Executive Officer has not yet concluded and Barclays will provide a further update once that is complete.”

Staley was first approached in 2012, but on that occasion the lender balked at the cost of buying out his contract at JP Morgan, where he had spent more than three decades.

The banker was appointed to the board of UBS – as a member of its compensations and risk committees – in 2015 and was a member of an advisory committee to the Federal Reserve bank of New York, according to the Financial Times, which first broke the story.

Staley left his post as the head of JP Morgan's investment bank and asset management unit in 2013 to join hedge fund Blue Mountain Capital.

"Notwithstanding the recent rebalancing of the group, investment banking will remain an important part and as such you might reasonably expect Barclays to seek someone with that skill-set," Investec's Ian Gordon told Digital Look immediately following the news.

Further cost-cutting ahead at investment banking

Goldman Sachs, in a note to clients, said it believed the appointment suggested Barclays’ intention to retain its core IB franchise.

Staley's IB background "would imply further scaling back the investment bank is unlikely, although we still expect some further refinements", with Barclays likely to focus on additional cost cutting measures at both the IB and within retail as the main avenues to improve group returns.

Kamal Ahmed, BBC business editor, said: “Those close to the process of hiring James Staley insist he is no "Bob Diamond Mark II" and that the investment bank will still have to find savings.

“The pre-2008 era is definitely over, my sources say.”

However, analysts from at least one large broker thought choosing Staley meant a round of fundraising was now more likely, as it would be necessary to help finance a more potent investment bank.

As of 14:58 shares in Barclays were 2.59% lower at 249.85p.