John Varley

John Varley
Born	1956-04-01April 1, 1956 (age 70) Warwick, England
Nationality	British
Education	Downside School; Oriel College, Oxford (History); College of Law
Occupation	Banker
Company	Barclays
Title	Former Group Chief Executive
Spouse	Carolyn Thorn Pease (m. 1981)
Children	2

John Silvester Varley (born 1 April 1956) is an English banker who was group chief executive of Barclays from 1 September 2004 to March 2011, leading the bank through the 2007 to 2009 financial crisis. He joined Barclays in 1982 and spent nearly his entire career there, rising through its investment bank, its asset management division, its retail bank and the role of group finance director before becoming chief executive.

As chief executive, Varley oversaw Barclays' decision to raise capital from Qatari and other overseas investors in 2008 rather than accept a United Kingdom government bailout, a step that left Barclays as the only major British clearing bank to avoid state ownership during the crisis. He also led the acquisition of a majority stake in South Africa's Absa Group in 2005 and the purchase of Lehman Brothers' North American investment banking operations in 2008.

In June 2017, following a Serious Fraud Office investigation that had opened in August 2012, Varley and three former Barclays colleagues were charged with conspiracy to commit fraud and the provision of unlawful financial assistance in connection with the 2008 capital raisings, making him the first chief executive of a major bank to face UK criminal charges arising from the financial crisis. In April 2019 the trial judge ruled that Varley had no case to answer and discharged him, and in June 2019 the Court of Appeal declined an application by the Serious Fraud Office to overturn that ruling; Varley was acquitted, and no finding of wrongdoing was made against him.

After leaving Barclays, Varley served as a non-executive director of BlackRock, Inc. from December 2009, of AstraZeneca and of Rio Tinto, from whose board he resigned as senior independent director when he was charged in 2017. He married Carolyn Thorn Pease in 1981, connecting him by marriage to the Pease family, a historic Quaker banking family whose bank merged into Barclays in 1902.

Early life and education

John Silvester Varley was born on 1 April 1956 in Warwick, England, the only son of Philip Varley, a solicitor in Coventry. He was educated at Downside School, a Catholic boarding school near Bath run by Benedictine monks, where he was head boy. He went on to Oriel College, Oxford, where he gained a first-class degree in history, and then trained as a solicitor at the College of Law in London. He worked briefly as a solicitor, originally intending a legal career, before joining Barclays in 1982.

Career

Barclays Merchant Bank and BZW, 1982 to 1994

Varley joined Barclays Merchant Bank in 1982. He worked in the team that advised on setting up a new investment banking operation, launched as BZW (Barclays de Zoete Wedd) in 1985. His career took him to Hong Kong as managing director of BZW (Asia), and he went on to become deputy chief executive of BZW's equities division in 1991. He left in 1994 for a position in fund management, before returning the following year.

Asset management, retail banking and group finance director, 1995 to 2003

Varley returned in 1995 after being recruited by the then chief executive, Martin Taylor, as chairman of BZW's Asset Management Division. He joined the Group Executive Committee in September 1996. In 1998 he was made chief executive of the Retail Financial Services division and was appointed to the main board that year. In 2000 Varley became the group's chief finance officer, a move that coincided with the acquisition of the Woolwich building society that year; the wider group also expanded internationally during this period, including through the purchase of the Spanish bank Banco Zaragozano. He held the position of group finance director from 2000 until the end of 2003, an unusual career path for an executive without an accounting qualification.

Group chief executive, 2004 to 2011

At the start of 2004, Varley was appointed group deputy chief executive in preparation for his succession to Matthew Barrett, and on 1 September 2004 he became group chief executive. He led the bank for six and a half years, a tenure that encompassed a major African acquisition, an unsuccessful bid for a Dutch bank, the 2008 financial crisis, and the Qatar-backed capital raisings that later gave rise to criminal charges against him.

By 2006, when half-year profit rose 37 per cent to £3.67 billion on the strength of the investment banking arm, Varley was being described as the most articulate of Britain's banking chief executives and a vocal defender of the industry's profits and pay. In 2007, Varley led an unsuccessful takeover bid for the Dutch bank ABN AMRO, ultimately withdrawing in the face of a rival consortium bid.

Varley's final full year as chief executive, 2010, was dominated by public anger over bank pay and by debate over whether retail and investment banking should be separated. Giving an interview from Shanghai in September 2010, he mounted what was described as a now well-practised defence of his industry after criticism from the Bank of England governor, Mervyn King, that "there was nothing fair about the financial crisis" and that "our financial system needs radical reform". Varley responded that "what I accept is that there are public policy issues here that should be debated" and said he would "participate extensively" in the consultation on bank structure then under way. Reports at the time noted that Varley had told colleagues, when he took the helm seven years earlier, that he intended to retire at 55.

It was announced in September 2010 that Varley would step down as chief executive at the end of March 2011 after six and a half years in the role, to be succeeded by Robert E. Diamond Jr, who had headed the investment banking arm. Varley's own employer later credited him, in its corporate history, with steering it through what it describes as the most dangerous financial crisis to beset the United Kingdom's financial system since the 1930s, and with being a central figure in negotiations at the highest levels of government, with regulators and with fellow bankers to avert the collapse of the clearing banks in 2008 and 2009.

Leadership and management style

Colleagues and profile writers consistently described Varley as analytical, controlled and detail-oriented rather than charismatic. Sir Laurie Magnus, vice-chairman of Lexicon Partners and a university friend, said of him: "He does have this fantastic ability to absorb detail, analyse it, and explain it. He is very hard working, and can put on an austere side, but he's great company." Justin Dowley, founder of Tricorn Partners, described him as reliable and principled: "John does the right thing, not just the clever thing. He is always reliable."

A 2006 profile described Varley's office as austere and his manner as "neat, organised, intellectual, a little lawyerly", noting that some considered him to lack the common touch while others argued his analytical and leadership skills were the basis of Barclays' performance. Varley himself defended the scale of banking profits and pay in terms of competition for talent, telling an interviewer in 2006: "It's a market, and we have an obligation to shareholders and customers to employ the best. David Beckham earns a huge amount too." He also stressed that Barclaycard rejected roughly one in every two lending applications in 2005 as evidence that the bank lent selectively rather than indiscriminately.

Varley ran a disciplined working routine, arriving at Barclays' Canary Wharf headquarters by 7.45 am and overseeing seven senior executives who reported to him directly, while setting aside roughly one week in four for travel to meet customers directly, saying: "If I sat in Canary Wharf all day, I would be at real risk of not understanding what customers think." He described a strong appetite for financial detail, saying "my average day will include a lot of work on the numbers. I have a big appetite for that."

On growing the business, Varley favoured organic expansion along identified market trends, which he termed "air currents", including increasing privatisation of welfare provision, growth in wealth management, rising emerging-market demand for banking products and growing corporate use of capital markets, rather than large transformational acquisitions, saying of the latter: "I don't foreswear it," while noting that such deals risked diluting earnings. He acknowledged that Barclays had been slow to integrate its 2000 acquisition of Woolwich, saying "we were slow to integrate it", and said subsequent international purchases, in South Africa and Spain, had performed better. On reshaping his senior team, which brought in more executives from outside the United Kingdom, he said: "I don't care where people come from. What I care about is how good they are, because that is what customers care about. The leadership team is a blend, which is what I would expect. I am chief executive and British, and I send a signal thereby."

Asked in 2010 about public hostility towards bankers, Varley said: "If you've got thin skin, you shouldn't run a bank," while acknowledging that the industry "got a lot of things wrong" during the crisis and expressing gratitude for the government intervention that had stabilised the financial system. He defended competitive City salaries as necessary to retain staff, warning that excessive taxation of bonuses risked driving talent to rival financial centres such as Singapore or New York, while noting that total compensation at Barclays had fallen by 50 per cent the previous year against a profit decline of only 16 per cent. He also opposed structural separation of retail and investment banking, arguing that the size of a bank was not in itself an indicator of risk and that a diversified, universal banking model spread risk while benefiting customers and shareholders.

Major deals and strategic decisions

Absa and international expansion

In 2005, Varley oversaw the acquisition of a majority stake in Absa Group, one of southern Africa's largest banking groups, for £2.9 billion, which he described at the time as the biggest deal in the bank's history. Under Varley, the Absa purchase, according to the Barclays Group Archives, allowed the bank to properly re-enter South Africa for the first time since the apartheid era and to expand its wider African operations significantly. During his tenure the group also sold its long-standing retail business in the Caribbean.

ABN AMRO bid, 2007

In 2007, Varley led one of the largest takeover battles then seen in European banking, bidding for the Dutch bank ABN AMRO. The bid was ultimately unsuccessful and he withdrew it in the face of a rival consortium offer.

Lehman Brothers acquisition, 2008

At the height of the financial crisis in September 2008, Varley's bank acquired the North American investment banking and capital markets businesses of the collapsed Lehman Brothers, a deal the Barclays Group Archives describe as of potential long-term significance to the firm.

The 2008 capital raisings

Rather than accept UK government recapitalisation on the terms offered to Royal Bank of Scotland and Lloyds Banking Group, Varley chose to raise capital privately from a group of international investors during 2008. On 4 July 2008, the group issued 168.9 million new ordinary shares at £2.96 per share in a firm placing to Sumitomo Mitsui Banking Corporation. On 22 July 2008, it issued a further 1,407.4 million new ordinary shares at £2.82 per share, raising approximately £3.97 billion before issue costs, in a placing to Qatar Holding LLC, Challenger Universal Limited (representing the beneficial interests of Sheikh Hamad bin Jassim bin Jabr Al Thani, then chairman of Qatar Holding LLC, and his family), China Development Bank, Temasek Holdings and other institutional investors, with the shares available for clawback through an open offer to existing shareholders. According to the Telegraph, the two 2008 capital raisings together raised a total of about £11.8 billion.

On 31 October 2008, warrants were issued, alongside a simultaneous issue of Reserve Capital Instruments, to subscribe for up to 1,516.9 million new ordinary shares at a price of £1.97775, exercisable up to 31 October 2013, to Qatar Holding and to entities representing the beneficial interests of Sheikh Mansour bin Zayed Al Nahyan, a member of the Abu Dhabi royal family; the warrants were attributed a fair value of £800 million before £24 million of transaction costs. On 27 November 2008, £4.05 billion of 9.75 per cent Mandatorily Convertible Notes, maturing on 30 September 2009, were issued to Qatar Holding LLC, Challenger Universal Limited, entities linked to Sheikh Mansour, and existing institutional investors. Separately, in November 2008 a US$3 billion loan facility was made available to the State of Qatar, acting through its Ministry of Economy and Finance. Conversion of the outstanding notes and exercise of the warrants in full would, the group disclosed, have resulted in Qatar Holding LLC and Sheikh Mansour holding approximately 12.8 per cent and 16.5 per cent respectively of the enlarged issued share capital; as at 27 February 2009, Qatar Holding LLC alone already held 522,755,622 ordinary shares, representing 6.4 per cent of the company. The BBC reported contemporaneously that a total of around £12 billion had come from Qatar in 2008.

The fundraising secured Varley's bank its independence from the state, at a price. The New Statesman reported that Gulf investors received an interest rate of 14 per cent and acquired 15.5 per cent of the equity without existing shareholders first being consulted, prompting shareholder anger over the bypassing of pre-emption rights and forcing the board to reopen part of the fundraising to existing investors. The arrangements, and the fees and side agreements associated with them, later became the subject of the Serious Fraud Office investigation and prosecution of Varley described below, and were also investigated by the UK Financial Conduct Authority and by US regulators.

Sale of Barclays Global Investors

As part of a restructuring of the group's asset management operations, Varley's bank sold Barclays Global Investors, one of its major businesses, during the financial crisis period. The buyer was BlackRock, Inc., and Varley himself joined BlackRock's board of directors, filing an initial statement of beneficial ownership with the US Securities and Exchange Commission as a BlackRock director dated 1 December 2009.

Technology and product innovation

A corporate account of the Varley era also credits his leadership with maintaining a record of technical innovation in the home market during this period, including the development of contactless payment cards and the launch of PINsentry, described as the first hand-held chip-and-PIN card reader for use in UK online banking security.

Financial and market performance

Barclays' financial results grew substantially over Varley's tenure before the impact of the financial crisis. According to the company's own five-year financial record filed with the SEC, total income net of insurance claims rose from £14.1 billion in 2004, the year he became chief executive, to £23.0 billion in 2007, before easing slightly to £23.1 billion in 2008 as the crisis took hold. Profit before tax rose from £4.58 billion in 2004 to £7.14 billion in 2006 and £7.08 billion in 2007, before falling to £6.08 billion in 2008 as impairment charges and other credit provisions increased sharply, from £2.15 billion in 2006 to £5.42 billion in 2008, reflecting the deteriorating credit environment. Basic earnings per share fell from a peak of 71.9p in 2006 to 59.3p in 2008. The dividend per ordinary share was cut sharply from 34.0p in 2007 to 11.5p in 2008 as the bank conserved capital.

Headcount expanded considerably during the crisis years. The average number of people employed by the Barclays Group worldwide rose from 118,600 in 2006 to 128,900 in 2007 and 151,500 in 2008, an increase driven in large part by the Lehman Brothers acquisition and organic growth in emerging markets. By contrast, 2008 brought painful cost reduction elsewhere; a January 2009 press survey of banking pay noted that Varley had presided over more than 4,000 job cuts at Barclays that year.

Varley's own remuneration reflected the volatility of the period. His 2007 bonus was reported at £1.425 million, and total compensation for that year, including salary and other benefits, was recorded at approximately £2.42 million. By comparison, an August 2006 profile put his total salary package, including bonus, at £2.85 million for the previous year. His base salary stood at £1.1 million at both 31 December 2008 and 1 April 2009, and he was a member of the Barclays Group's closed UK defined-benefit pension scheme, under which an unreduced pension of two-thirds of his pensionable salary would be payable at the scheme's normal retirement age of 60. Varley's compensation fell sharply after the crisis; he told the New Statesman in early 2010 that Barclays' overall compensation pool had dropped 50 per cent the previous year against a far smaller 16 per cent fall in profit. Shares in Barclays closed down 1.9 per cent at 202.8p on the day the Serious Fraud Office announced its charges against Varley in June 2017, by which time he had already left the company.

Board memberships and outside roles

Varley held a number of non-executive and public-interest roles alongside his executive career at Barclays. He became a non-executive director of AstraZeneca PLC in 2006 and was also a non-executive director of British Grolux Investments Limited from 1999. He was a director of Ascot Racecourse. From December 2009, following the sale of Barclays Global Investors to BlackRock, he served as a non-executive director of BlackRock, Inc., a role in which his SEC ownership filings continued until April 2017. He also served as a non-executive director, and subsequently senior independent director, of the mining company Rio Tinto, a role from which he resigned in June 2017 when he was charged by the Serious Fraud Office.

Varley also held several unpaid public and charitable positions connected to his time at Barclays. He was chairman of Business Action on Homelessness from 2006, president of the Employers' Forum on Disability from 2005, honorary president of the UK Drug Policy Commission from 2007, and a member of the International Advisory Panel of the Monetary Authority of Singapore from 2006. By 2010 he was also treasurer and a trustee of St Dunstan's, the charity for blind ex-servicemen and women (now Blind Veterans UK). He went on to serve as a trustee of The Prince of Wales's Charitable Foundation, among a small governing body of trustees including Dame Amelia Fawcett, Sir Michael Rake and Clive Alderton, as recorded on the Foundation's governance page in 2016.

Controversies

The defining controversy of Varley's career was the Serious Fraud Office's prosecution of him over Barclays' 2008 Qatar-backed capital raisings. He was acquitted, and the prosecution against him did not result in any finding against him.

The SFO opened a criminal investigation into Barclays' capital raising arrangements with Qatar Holding LLC and Challenger Universal Limited in August 2012. On 20 June 2017, after an investigation lasting almost five years and involving interviews with more than 45 individuals, the SFO charged Barclays PLC and four former executives, Varley, Roger Jenkins, Thomas Kalaris and Richard Boath, with conspiracy to commit fraud by false representation and with the provision of unlawful financial assistance, contrary to the Fraud Act 2006, the Criminal Law Act 1977 and section 151 of the Companies Act 1985. Barclays PLC, Varley, Jenkins, Kalaris and Boath were all charged over the June 2008 capital raising; Varley and Jenkins alone were additionally charged over the October 2008 capital raising and over the unlawful financial assistance charge relating to the US$3 billion Qatar loan facility. The SFO's notes to editors described Varley, then aged 61 and living in London, as the former chief executive officer of Barclays PLC. The Telegraph reported that Varley faced a maximum of 22 years in prison if convicted on all counts, calculated from the maximum 10-year sentences carried by each of the fraud conspiracy charges and the maximum two-year sentence for unlawful financial assistance; it was the first time criminal charges connected to the financial crisis had been brought against a UK bank. The defendants appeared before Westminster Magistrates' Court on 3 July 2017. Varley resigned as senior independent director of Rio Tinto on the day the charges were announced. Chris Lucas, who had been Barclays' chief finance officer at the time of the capital raisings, was named as a co-conspirator on the indictment but was not himself charged or tried owing to ill health.

In February 2018, the SFO brought a further charge of unlawful financial assistance against Barclays Bank PLC specifically, relating to the US$3 billion loan made to Qatar Holding LLC between 1 October and 30 November 2008. The corporate charges against Barclays PLC and Barclays Bank PLC were dismissed by the Crown Court in May 2018; the SFO's application to the High Court to have them reinstated was rejected in October 2018, and the High Court also refused permission to appeal to the Supreme Court.

The case against Varley personally proceeded separately from that of his three former colleagues. In April 2019, the trial judge, Mr Justice Jay, ruled that there was insufficient evidence against Varley and discharged him, finding he had no case to answer. The SFO sought to challenge this decision, but on 21 June 2019 the Court of Appeal declined the SFO's application to overturn Mr Justice Jay's ruling, meaning Varley was acquitted of all charges against him. The BBC described the case against Varley as the only attempt to prosecute a chief executive of a major bank in connection with the financial crisis, and noted it had been an important test case for the SFO, which had faced criticism over the collapse of earlier prosecutions, including a case against three Tesco executives the previous year. Varley's three former colleagues, Jenkins, Kalaris and Boath, were ordered to face a retrial following the Court of Appeal's ruling; all three denied wrongdoing throughout, and Boath stated publicly that the SFO's decision to charge him was "based on a false understanding of my role and the facts" and that he was "not a decision-maker and had no control over what the bank did in 2008". On 28 February 2020, a jury acquitted Jenkins, Kalaris and Boath of all charges at the conclusion of the retrial, in what the SFO described as the United Kingdom's first trial of bank executives for conduct during the 2008 financial crisis. No individual associated with Barclays' 2008 Qatar capital raisings, including Varley, was convicted of any criminal offence arising from the SFO's investigation.

The Financial Conduct Authority separately examined the same 2008 arrangements and, several years before the criminal charges were brought, fined Barclays £50 million over its handling of fees and disclosures connected to the Qatar fundraising; Barclays contested the fine and it remained on hold while the SFO's criminal investigation continued, with the FCA reopening its own review of the matter once the criminal charges were announced in 2017. Barclays' dealings with Qatar in 2008 were also examined by US regulators, although no outcome of any such US review specific to Varley has been found in the sources used for this article.

Personal life

Varley married Carolyn Thorn Pease in 1981. His wife is a daughter of Sir Richard Thorn Pease, 3rd Baronet, connecting Varley by marriage to the Pease family, a Quaker family long associated with English provincial banking whose own bank was absorbed into Barclays in 1902. The couple have two children.

For about two decades Varley lived in the same house in Brook Green, Hammersmith, in west London, and he and his wife also built a house in Hampshire; a 2006 interviewer noted that Varley avoided displays of wealth and had objected when a newspaper reported on his new Hampshire home. He was reported in 2006 to relax by playing table tennis, to favour Charles Dickens's A Christmas Carol as a favourite book and Beethoven's Fifth Symphony as a favourite piece of music, and to drive a blue Mercedes estate car. The same profile described him as a man who ate lightly, often skipping breakfast and lunch, and who preferred, where possible, to be home for supper with his family. Varley is a Catholic, a faith reflected in his schooling at the Benedictine-run Downside School.

See also

• Barclays
• Robert Diamond
• Matthew Barrett
• Roger Jenkins
• Thomas Kalaris
• Richard Boath
• Serious Fraud Office
• BlackRock
• AstraZeneca
• Absa Group
• Rio Tinto

External links

• John Varley biography, Barclays Group Archives (archived)
• Barclays PLC and Qatar Holding LLC, Serious Fraud Office case page (archived)
• Barclays PLC Form 20-F for the year ended 31 December 2008, U.S. Securities and Exchange Commission