Saturday , December 4 2021

Barclays trading boss saw $6b London Whale coming

Bloomberg

As an example of why investment banks should listen to their risk managers, CS Venkatakrishnan’s experience at JPMorgan Chase & Co is hard to top. Back in 2012, just weeks into a senior risk job at the Wall Street giant, his team flagged the potential for $6.3 billion of losses from a murky derivatives trade in London.
The analysis was dismissed as “garbage” by the risk officer at the JPMorgan department responsible for the trades. But Venkat, as he’s known to colleagues, proved remarkably prescient. The trading strategy exploded spectacularly, giving rise to a $6.2 billion loss and the legend of the London Whale, the nickname for the banker who made bigger and bigger bets to try to cover his positions. A US Senate investigation said some losses would have been avoided if the Whale’s unit had heeded Venkat’s warning.
It was this level of acuity that encouraged Jes Staley to make Venkat one of his first hires when he became chief executive officer of Britain’s Barclays at the end of 2015. And it explains why the Indian executive has emerged as front-runner to succeed his former JPMorgan comrade as Barclays CEO, according to people who asked not to be identified discussing confidential matters. Barclays declined to comment.
Known for his genial unflappability — and fondness for emojis — even in the thick of a corporate crisis, Venkat was brought in initially by Staley as chief risk officer. The recruitment worked out well. Staley has praised the processes put in place by Venkat’s team for helping Barclays avoid this year’s blowup of Bill Hwang’s Archegos Capital Management.
It was a surprise nonetheless when the CEO anointed the risk expert as a possible successor last year by promoting him to run the Barclays markets division, home to the company’s all-important trading operations and contributor of almost a third of its revenue. The 55-year-old has since become the internal favorite for Staley’s job, though external candidates are being sounded out, too. Paul Compton, another JPMorgan alumnus, is also in the frame after taking the reins of the Barclays investment banking operations.
Venkat’s rise speaks to the ever more central role that placating regulators plays in modern investment banking, with the ability to sniff out a future Archegos, Greensill Capital or London Whale deemed just as important than a good nose for a trading strategy.

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