December 2, 2015 / 8:40 PM / 2 years ago

Exclusive: Barclays' boss wants Blythe Masters to run investment bank - source

The Barclays logo is seen outside a branch of the bank in central London October 30, 2014.Toby Melville

NEW YORK/LONDON (Reuters) - New Barclays Plc (BARC.L) Chief Executive Jes Staley approached his former JPMorgan colleague Blythe Masters about running the British bank's investment bank division, a person familiar with the matter said on Wednesday.

But Masters told Reuters she was fully committed to running her company, Digital Asset Holdings - a startup designed to speed the trading of derivatives by using technology associated with bitcoin. She joined the company as chief executive in March.

"I can't think of a better person than Jes Staley, nor a more venerable institution than Barclays, but I am in mid-flight at Digital Asset and fully committed to what we are doing," Masters said.

Staley spoke to Masters about joining the bank late next year, the source said. He declined to be named because details of the approach were confidential.

A spokesman for Barclays declined to comment.

Masters, best known for helping to create the credit-derivatives market in the 1990s, was the most high profile woman on Wall Street when she left JPMorgan last year after a 27 career with the bank.

Barclays is shrinking its investment banking business and its current boss, Tom King, threatened to quit in the summer during a row with then-CEO Antony Jenkins over the future of the division, people familiar with the matter told Reuters at the time.

Chairman John McFarlane persuaded King to stay, but the row contributed to the ousting of Jenkins shortly after by McFarlane, the sources said.

There has been speculation in the media that King would retire next year.

King did not respond to Reuters requests for comment.

The potential hire would be the latest step in Barclays' efforts to remake itself after being rocked by a series of scandals, including its role in fixing the benchmark interest-rate known as Libor.

Staley, who used to run JPMorgan's investment bank, only started as Barclays chief executive on Tuesday and is under pressure to set out a clear vision for the investment bank, where returns are the weakest in the group and costs need to be cut. There have been multiple shifts in its strategy in recent years, and it is now focusing on its core U.S. and UK markets and cutting about 7,000 jobs.

CONTROVERSY

If Masters joined Barclays, the bank's top three executives, including Finance Director Tushar Morzaria, would all be JP Morgan veterans.

The U.S. bank's alumni feature heavily in the upper echelons of financial services, including Bill Winters, the new chief executive at Standard Chartered, Peter Hancock, the boss at insurer AIG and Charlie Scharf, the chief executive of Visa.

Masters, who was born in Oxford and grew up in Britain, started off in JP Morgan as an intern and worked her way up to run the bank's commodities trading operation, delivering pep talks to New York traders with a cut glass English accent.

A controversial figure, she helped develop and market credit derivatives, which were meant to insure investors if a loan went into default but instead blew huge holes in the balance sheet of financial firms such as insurer AIG during the 2007-08 financial crisis.

She was the chief financial officer of JP Morgan's investment bank from 2004 to 2007 before switching to run the commodities business, which she built into one of the biggest players in the industry.

She was back in the spotlight in July 2013, when JP Morgan agreed to pay $410 million to settle U.S. Federal Energy Regulatory Commission allegations that units Masters oversaw manipulated power markets, enriching itself at the expense of California and Midwest residents from 2010 to 2012.

JPMorgan sold its physical commodities arm in 2014 as regulatory changes made it a less profitable business for banks, and Masters left the bank.

Michael Holland, who oversees more than $4 billion as founder of Holland & co, said Masters would be a good choice for the job when judged solely on her merits, but given her past controversies, the optics of the choice could make her a tough sell to investors.

"Does Barclays really need this? Because they've had enough headlines over the last few years that have given people pause," he said.

Editing by Andrew Hay

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