Barclays Eyes Ex-JPM Banker Staley for CEO; Weak Bank Earnings Forecast

Receiving Wide Coverage ...

Is Staley the Choice of Barclays? Barclays will name Jes Staley its chief executive, as yet another former JPMorgan Chase banker is tapped to lead a financial-services institution. Unnamed sources told the Wall Street Journal, New York Times and Financial Times that Staley will be appointed in the next two weeks, pending regulatory approval.

Staley is currently with U.S. hedge fund Blue Mountain Capital, a group he joined in 2013 after leaving JPMorgan, where he led its investment bank. Several analysts questioned the move, saying it appeared to be a U-turn back toward investment banking. When Barclays fired Antony Jenkins, it was said Jenkins did not understand investment banking.

“The Street will also not like the implied move back to investment banking,” Bernstein analyst Chirantan Barua told the FT. This will mark the second time that Barclays considered hiring Staley as its CEO. He was beaten out for the job in 2012 by Jenkins.

The Journal takes a look at Staley's career, pointing out he spent most of the 1980s in Brazil, running corporate finance for Morgan Guaranty Trust. He later moved to New York to run JPMorgan's convertible securities trading desk, and then its private bank. Staley said his “breakthrough career moment” was winning over CEO Jamie Dimon to his idea of offering only internal investment products to the wealthy clients of its private bank.

The FT compares and contrasts Staley with Bob Diamond, another American investment banker who ran Barclays until he was fired in 2012. Staley is not a brash trader like Diamond, the FT said. Instead he's a more thoughtful banker whose experience in private banking and asset management are seen as likely reasons he's attractive to Barclays. The FT also looks at some of the other former JPMorgan bankers who've been hired to run other banks, including Tushar Morzaria, the group finance director at Barclays, who had been at JPMorgan's investment bank; and Bill Winters, who now runs Standard Chartered.

Wall Street Journal

JPMorgan Chase has told some of its employees to pay for their own phones, in a bid to cut costs. JPMorgan will stop providing support to employees' BlackBerry devices and will tell employees to pay for their own phones, both BlackBerry and other brands, unnamed sources said.

The reasons for the zeal to chop expenses are well-known to American Banker readers. Low rates squeeze profit margins, sluggish trading revenue, etc., are cited by the unnamed sources as the reason for JPMorgan's current push to reduce phone costs. It's not the first out-of-the-box way to cut costs that JPMorgan has pursued. It's told employees it'll reduce the number of hotels it approves for business trips. It's requiring some employees to get manager approval to stay at five-star hotels. And it's testing a plan to force employees to share desks, a tactic called “ratio seating.” JPMorgan was also one of three banks, along with Bank of America and Citigroup, that killed off voice mail to lower expenses.

Big banks aren't expected to post boffo results for the third quarter; but no big negative surprises are projected either. That's the forecast from the “Heard on the Street” column for the upcoming earnings season.

Weak trading revenue and tightening margins from the Fed's decision to take a pass on rate hikes made it difficult for big banks to generate momentum during the quarter. The mortgage business was also sluggish. If there's a silver lining, it's that the lowered expectations may make it a tad easier for banks to outperform in the fourth quarter.

Speaking of the upcoming earnings season, JPMorgan is scheduled to release third-quarter earnings after the closing bell on Tuesday. It may be the first time ever that JPMorgan releases earnings at that time of day, instead of 6:59 a.m., ET, as is its tradition. JPMorgan said it changed the time to avoid conflicting with another bank that it didn't name; this, despite the fact JPM has typically released earnings at the same time as Wells Fargo. The Journal speculates that when Bank of America said it would release earnings on Wednesday, JPMorgan changed the time of its release, to avoid coming out the same time as B of A.

Financial Times

The British payments processor Worldpay held an IPO, with an eye toward raising up to $3.8 billion (2.5 billion pounds). Worldpay last month rejected a takeover offer from French rival Ingenico; the IPO values Worldpay at slightly less than Ingenico's takeover offer. Worldpay is chaired by Sir Mike Rake, the deputy chairman at Barclays, and it's owned by U.S. private equity firms Bain Capital and Advent International.

The first trial in the U.S. over alleged Libor manipulation is set to begin on Tuesday in New York. Two former Rabobank employees have pleaded not guilty, former global head of liquidity and finance Anthony Allen and former trader Anthony Conti. Judge Jed Rakoff, who's criticized regulators for being too soft on bankers and not holding individuals accountable, will oversee the trial. Rabobank in 2013 agreed to pay $1 billion to U.S., U.K. and Dutch authorities.

Elsewhere ...

Bloomberg: The former leader of the Acjachemen Nation in California is leading an effort to have tribal banks provide financial services to pot businesses. Anthony Rivera's CannaNative organization is trying to connect leaders from the 566 American Indian nations with finance professionals and marijuana businesses. Rivera sees an opening, because mainstream banks fear getting into the business of pot banking for fear of regulatory punishment. “Indian casinos are basically small little banks,” Rivera said, arguing tribal governments have the needed experience to manage pot banking.

Charlotte Observer: Why did Regions Bank see 61% growth in deposits in the Charlotte, N.C., market from 2014 to 2015? The Birmingham, Ala., bank attributed the growth — the fastest rate in the market for that time period — to a bank decision to change the way it records corporate deposits.

“While we did see solid growth in our deposit balances in Charlotte, we also had some changes in allocation methodology for corporate deposits that were reflected in the Charlotte balances,” a Regions spokesman said. Regions' branch count in the Charlotte area has not changed in the past four years. But Regions has expanded other operations in Charlotte, including investment banking and capital markets.

Krebs on Security: The thrift-store chain America's Thrift Stores has reported a credit card security breach. America's Thrift Stores said hackers from Eastern Europe gained unauthorized access to payment card numbers.