Jes Staley, chief executive of Barclays, has apologised to shareholders for the “error” he admitted he had made in trying to uncover the identity of a whistleblower.
In an attempt to take the sting out of the bank’s annual meeting on Wednesday, the Barclays CEO said: “I feel it is important that I acknowledge to you, our shareholders, that I made a mistake in becoming involved in an issue which I should have left to the business to deal with.
“I have apologised to the board, and I would today like to apologise to you as well, for that error,” said the 60-year-old American hired to run Barclays in December 2015.
The board has given Mr Staley a formal reprimand and promised to cut his pay by a “very significant” amount for ordering the bank’s security team to try to identify a whistleblower who had made allegations about a recently recruited colleague.
Regulators in the UK are investigating the matter in the most significant test to date of the country’s new senior manager regime, which allows the authorities to bar executives from the financial sector for serious wrongdoing if they are judged not “fit and proper”.
John McFarlane, chairman, told investors at the AGM: “You know me, if I believed a chief executive should go, he would go. But I do not believe that is what should happen.”
“As long as he wasn’t successful in identifying the individual, he just made a mistake and you can’t be as good as your last mistake,” he said. “I have been doing this for 40 years and I mean if that was the standard I would have gone years ago.”
Mr McFarlane defended Mr Staley, pointing out the board believed it was dealing with an “external” whistleblower from the US rather than a Barclays employee.
He added that when Mr Staley first asked about the whistleblower, he was told he was not allowed to pursue their identity. When he asked about it a second time he was told the case was closed, which he mistakenly interpreted as a signal that he could try to identify the source of the letters.
“He thought he had a green light and he went through the green light and actually it was red,” said Mr McFarlane, known as “Mac the Knife” for his habit of firing CEOs both at Barclays and in his previous job at insurer Aviva.
The chairman said all directors agreed to stick with Mr Staley when they discussed the issue. “We ended up in a position that provided he was willing to see it through, which was going to be difficult for him, we were perfectly comfortable about supporting him . . . He tried something but didn’t succeed and it was one episode in what was hundreds of decisions that he has made.
“At the time he was a relatively new chief executive — it’s no excuse — but he had to learn his lesson and he has done that,” said the chairman. “The action for going through a red light usually is you do not lose your licence.”
Michael Mason-Mahon, an individual shareholder, asked: “Has the behaviour of the CEO brought nothing but shame on the name of Barclays? For the sake of Barclays plc and its shareholders and its customers, will you behave with honour and resign today?”
Another shareholder said: “It beggars belief that Mr Staley was not aware of the whistleblower procedures or was not briefed on them when he joined the bank.” A third shareholder said the affair cast doubt on the “moral calibre” of the bank.
Most shareholders and board members think he will survive the regulators’ investigations, which Mr McFarlane said were likely to take several months. “We are not in full control of this but we think the regulatory authorities are dealing with the same facts,” he said.
ISS, a proxy adviser to many large shareholders, advised investors not to vote in favour of Mr Staley’s re-election, which resulted in 13 per cent withholding their support from the CEO and about 2.4 per cent voting against him.
There was also a sizeable protest vote against Sir Ian Cheshire, who won support of only 86 per cent of investor votes after criticism of his numerous other directorships, some of which he has promised to give up by September.
Meanwhile, 14 per cent of investors voted against amendments to the bank’s long-term incentive plan, which make it easier for executives to earn the full amount even if they leave early.
Separately, Barclays agreed to pay $97m in compensation to asset management clients who were overbilled for services and products in a settlement with the US Securities and Exchange Commission that was announced on Wednesday.
The SEC said the bank had charged more than 2,000 clients for due diligence and monitoring services that were not performed as represented, collected excess mutual fund sales charges or fees from 63 brokerage clients, and over-charged 22,138 accounts due to miscalculations and billing errors.
“Barclays failed to ensure that clients were receiving the services they were paying for,” said Dabney O’Riordan, co-chief of the SEC enforcement division’s asset management unit.
The overcharging allegations concern the bank’s US wealth management business, which was sold with about $56bn of client assets to Stifel Financial in 2015. Barclays, which did not admit or deny the SEC’s findings, declined to comment.