Barclays CEO Jes Staley has revealed how his company has made adjustments in accordance with the various banking regulations in the United States, and that his peers in the sector need to get used to them, in an interview with CNBC at the World Economic Forum in Davos.
He told CNBC: “I think the Volcker rule is very clear, they want to move Wall Street from managing proprietary and trading desks to being agents and broker dealers for the broader capital markets.”
“Barclays has gotten there very quickly, we are not in the proprietary trading business in our investment bank, we like the broker dealer model, we like the consistency of our revenues, we like the revenues versus risk that we have, which I think is where the regulators want us to be,” he added.
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Staley said that he believes that Dodd-Frank, a comprehensive and notoriously complicated piece of financial regulation which emerged after the 2008 recession, is going to stay in place and that “the banks need to operate on this”.
However, his comments may not deter some of the big US banks who were recently reported to be gearing up for getting Congress to loosen or even eliminate the much-loathed Volcker rule in the belief that it is reducing market liquidity, thereby hurting companies, investors and the economy.
In terms of reaching a settlement with the US Department of Justice over the mis-selling of mortgage-backed securities, this has yet to materialise, unlike Germany’s biggest bank, Deutsche Bank, which recently agreed to a $7.2 billion deal. However, hopes remain for a fair settlement which appropriately reflects the agreements made between the US banks and officials.
Staley said that banks needed to fix their mistakes but stressed that any deal needed to be fair.
He concluded: “We will deal with the Department of Justice with this issue over time and we’ll be fine”.