WEBVTT 00:00:00.480 --> 00:00:01.879 Welcome to School of Thought, 00:00:02.279 --> 00:00:04.799 A podcast from Ontario Teachers' Pension Plan, 00:00:05.480 --> 00:00:09.160 where we speak with global decision makers about opportunities, 00:00:09.480 --> 00:00:12.279 risks, career journeys, and lessons in leadership. 00:00:13.400 --> 00:00:16.920 I'm Joe Taylor, CEO of Ontario Teachers' Pension Plan. 00:00:17.000 --> 00:00:20.760 I'm thrilled to have of my guest today C. S. Venkatakrishnan. 00:00:21.239 --> 00:00:23.359 He's the CEO of Barclays. 00:00:23.559 --> 00:00:26.199 But more than that, he's a very experienced banker 00:00:26.239 --> 00:00:28.679 and somebody who's got a fantastic view 00:00:28.760 --> 00:00:31.480 of the world of finance and what's happening at the moment. 00:00:32.759 --> 00:00:34.399 Disclosing some of my own points, 00:00:34.920 --> 00:00:37.399 I've been a big fan of Barclays throughout my life. 00:00:37.640 --> 00:00:38.520 It was my first bank. 00:00:39.799 --> 00:00:41.840 It's been a great support for Teachers' 00:00:41.880 --> 00:00:44.439 in our investment activities in private companies. 00:00:45.159 --> 00:00:46.039 So Venkat, welcome. 00:00:46.359 --> 00:00:48.439 Jo, thank you very much. Thank you for having me. 00:00:48.479 --> 00:00:52.479 And thank you for being a 40 year customer of Barclays. 00:00:52.520 --> 00:00:54.200 Well, thank you for looking after me for that long. 00:00:54.359 --> 00:00:54.600 Thank you. 00:00:55.000 --> 00:00:57.399 I thought we might start at the beginning if that's okay. 00:00:57.439 --> 00:00:57.719 Yeah 00:00:57.759 --> 00:00:59.840 Now, you were born in Mysuru? 00:00:59.920 --> 00:01:00.840 Mysuru, yes. 00:01:01.280 --> 00:01:05.640 This probably isn't a town in India that a lot of people know much about. 00:01:05.879 --> 00:01:08.560 Do you want to just give a bit of a flavour of how you saw it? 00:01:08.719 --> 00:01:11.359 Well, I was born there but I didn't spend much time there. 00:01:11.519 --> 00:01:14.480 It is actually a delightful town in the deep south of India. 00:01:15.159 --> 00:01:18.400 It's about 100 miles south of Bangalore, which is the big tech capital, 00:01:18.480 --> 00:01:20.079 but was then a sleepy town. 00:01:20.400 --> 00:01:22.159 I spent most of my childhood in New Delhi, 00:01:22.519 --> 00:01:24.480 which was then a beautiful, 00:01:24.560 --> 00:01:29.200 relatively uncrowded, spacious, green city with clear blue skies. 00:01:29.560 --> 00:01:32.599 A lot of your career really then moved to the U.S. 00:01:32.680 --> 00:01:32.879 Yes. 00:01:33.319 --> 00:01:35.200 Now you had a fascinating degree. 00:01:35.799 --> 00:01:38.200 At a wonderful institution MIT, 00:01:38.560 --> 00:01:43.439 but it was something to do with mathematical overview 00:01:43.599 --> 00:01:47.680 or organizational activity for air traffic controllers, I believe. 00:01:47.799 --> 00:01:48.040 Yes. 00:01:48.359 --> 00:01:49.319 What led you to that? 00:01:49.680 --> 00:01:52.359 Well, I got funding, so that always helps. 00:01:52.719 --> 00:01:54.159 I went to MIT as an undergraduate. 00:01:54.719 --> 00:01:57.280 And I couldn't quite figure out what I wanted to do. 00:01:57.359 --> 00:01:59.840 I did a bit of computer science, I did a bit of economics. 00:01:59.879 --> 00:02:05.079 I did a bit of what they call management science, which is mathematical optimization. 00:02:05.799 --> 00:02:07.760 I ended up sticking with the last of the three 00:02:08.479 --> 00:02:10.960 and did a PhD in what's called operations research, 00:02:11.000 --> 00:02:15.599 which is a combination of statistics and mathematical optimization. 00:02:16.080 --> 00:02:18.400 But I was very interested on the side in economics. 00:02:18.479 --> 00:02:19.360 I kept that going. 00:02:19.680 --> 00:02:22.240 And then I had this interesting problem which had funding, 00:02:22.879 --> 00:02:27.719 which was, how do you sequence airlines - or aircraft 00:02:27.759 --> 00:02:29.599 to come in to land at a busy airport, 00:02:30.039 --> 00:02:32.879 to get them down as quickly as you can as safely as you can. 00:02:33.319 --> 00:02:37.599 And it was really cool because in those days I could go into control towers. 00:02:38.840 --> 00:02:42.039 We had radar that tracked planes as they came into Boston Airport. 00:02:42.319 --> 00:02:45.159 And then in the last couple of miles, 00:02:45.960 --> 00:02:49.120 the radar lost the tracking and we would watch with binoculars 00:02:49.159 --> 00:02:51.080 and check timings of landing. 00:02:51.639 --> 00:02:55.439 And so we had the data of when a plane entered airspace and when it landed, 00:02:56.039 --> 00:02:58.560 and we had to figure out how to sequence them better. 00:02:58.560 --> 00:02:59.719 It was a fascinating problem. 00:03:00.280 --> 00:03:03.280 So should I and everybody else flying these days be thankful 00:03:03.360 --> 00:03:06.840 to you that the planes get down safely as well as on time? 00:03:07.039 --> 00:03:09.360 Well, I think you should thank the air traffic controllers. 00:03:09.599 --> 00:03:11.599 I had great respect for them then, 00:03:12.039 --> 00:03:14.400 and it's even greater now because I think traffic is higher. 00:03:14.680 --> 00:03:18.280 Now, you did have a wonderful line in your thesis, which we pulled out, 00:03:18.360 --> 00:03:21.439 which says that according to Indian thought, 00:03:22.159 --> 00:03:26.319 the teacher is central to the success of any learning endeavour. 00:03:26.840 --> 00:03:27.599 I love that line. 00:03:27.680 --> 00:03:28.439 Thank you. 00:03:28.520 --> 00:03:30.199 Now, we look after teachers. 00:03:31.080 --> 00:03:32.360 So very relevant to us. 00:03:32.680 --> 00:03:35.919 We also like to believe we're a learning institution. 00:03:36.360 --> 00:03:40.080 I tend to ask this of others, because, you know, it was certainly true of myself. 00:03:40.439 --> 00:03:43.719 Has there been an educator in your life that's really been somebody 00:03:43.759 --> 00:03:48.319 who's stood out to you in terms of shaping your self, your future? 00:03:49.080 --> 00:03:49.840 There have been a few. 00:03:50.400 --> 00:03:54.840 And look, it's a it's a great honor to be with the Ontario Teachers' program. 00:03:54.879 --> 00:03:57.199 To work with you and the institution and to be here. 00:03:57.800 --> 00:04:00.360 Because I think the teacher is one of 00:04:00.400 --> 00:04:03.199 the most fundamental people in one's lives 00:04:03.280 --> 00:04:08.280 who shape one's one's character, one's one's profession, one's being. 00:04:08.879 --> 00:04:13.639 When we begin in life, I think we look at teachers as people who give us information. 00:04:14.159 --> 00:04:18.839 They educate us, they teach us reading, writing arithmetic, sciences. 00:04:18.879 --> 00:04:19.800 And you get to a point. 00:04:20.680 --> 00:04:22.720 I think at this - some point in life, 00:04:23.480 --> 00:04:29.199 one starts to realize that teachers not only teach you what to do, but how to do it. 00:04:30.120 --> 00:04:32.680 And so it becomes from a vocational skill 00:04:33.360 --> 00:04:35.279 to something about character 00:04:36.000 --> 00:04:40.360 and about behavior and about how - and resilience and adaptability. 00:04:40.800 --> 00:04:43.399 And all those soft things that help you much later in life. 00:04:43.839 --> 00:04:46.000 So it's hard to pick out a few, but I'll pick a few. 00:04:46.240 --> 00:04:47.680 I'll say my parents, first of all. 00:04:49.079 --> 00:04:53.839 Who gave in me both a respect for organizations. 00:04:54.959 --> 00:04:57.800 Respect for respect, if I can say that. 00:04:58.079 --> 00:04:58.279 Yes. 00:04:59.399 --> 00:05:01.199 And a set of values, 00:05:01.839 --> 00:05:04.000 which I hope I have not disappointed them in. 00:05:05.319 --> 00:05:09.160 I mean, I tried when I was younger to disappoint them, but I've been better behaved since then. 00:05:09.720 --> 00:05:15.560 The second was... Do you know my thesis advisors MIT were really very good. 00:05:15.600 --> 00:05:19.279 They were tolerant of a young man who was trying to do too much, 00:05:19.319 --> 00:05:23.639 who was trying to do things he was probably you know, not fully capable of doing. 00:05:23.839 --> 00:05:26.360 And but they taught me one very important thing. 00:05:26.680 --> 00:05:29.759 And two gentlemen, Arnold Barnett and Amedeo Odoni, 00:05:30.560 --> 00:05:32.720 they taught me how to communicate something simply. 00:05:33.040 --> 00:05:33.519 Great skill. 00:05:33.759 --> 00:05:35.199 It's a great, great skill. 00:05:35.360 --> 00:05:38.199 And I and I'll never forget, actually, 00:05:39.199 --> 00:05:42.319 the first time it was drilled into me was in a six hour practice session 00:05:42.759 --> 00:05:45.800 to go to my first academic conference, which was in Canada. 00:05:46.199 --> 00:05:47.839 I was going to Montreal. 00:05:47.920 --> 00:05:51.360 And I was taught how to present something in 15 minutes crisply. 00:05:52.199 --> 00:05:53.759 Moving on, you enter the work life. 00:05:54.279 --> 00:05:56.040 I spent 22 years at JP Morgan. 00:05:56.839 --> 00:05:59.560 Towards the latter part - the last seven, eight years - 00:05:59.639 --> 00:06:03.000 I have the privilege of seeing Jamie Dimon up close. 00:06:04.759 --> 00:06:09.600 And he's a remarkable business leader, a remarkable human being. 00:06:10.040 --> 00:06:13.319 He made such an impression on me with his intelligence, with his drive, 00:06:13.399 --> 00:06:17.279 with his personality, with his ability to communicate, 00:06:18.120 --> 00:06:21.079 that a day doesn't go by when I face a difficult situation, 00:06:21.120 --> 00:06:22.680 I ask myself, what would Jamie do? 00:06:23.160 --> 00:06:23.240 Yep. 00:06:23.680 --> 00:06:26.560 So he's a person who's made a remarkable impression on me. 00:06:27.319 --> 00:06:29.040 And then subsequently, I would say, 00:06:29.720 --> 00:06:31.920 there's this English phrase, don't spare their blushes, 00:06:32.560 --> 00:06:34.480 but I would say being in Barclays, 00:06:34.560 --> 00:06:38.720 I've been very fortunate to have a very good chairman of our board, Nigel Higgins. 00:06:38.759 --> 00:06:40.800 Who has taught me how to be in the UK, 00:06:41.560 --> 00:06:48.360 who has given me an insight into how you are a CEO and manage the stakeholders. 00:06:48.600 --> 00:06:49.560 I've learned a lot from him. 00:06:49.639 --> 00:06:51.560 And then I learn a lot from people who work for me. 00:06:52.000 --> 00:06:53.839 Because because they, 00:06:54.279 --> 00:06:57.279 first of all, they educate me on newer things, 00:06:58.000 --> 00:07:01.959 and second, they teach me how the organization gets things done. 00:07:02.199 --> 00:07:04.519 The other thing I found quite interesting was, you know, 00:07:04.560 --> 00:07:09.000 with all that you've said, and you're hugely successful at a JP Morgan. 00:07:09.040 --> 00:07:12.399 And then the transition to Barclays was, I think, 00:07:12.439 --> 00:07:18.079 initially more in a risk format for the for the Barclays organization. 00:07:18.360 --> 00:07:20.399 How easy was that for you to make that transition? 00:07:20.439 --> 00:07:25.160 I assume quite easy, because you you've got a lot of risk built in to your analysis. 00:07:25.160 --> 00:07:26.959 But what were some of the challenges? 00:07:27.000 --> 00:07:32.079 Because I guess it also came with moving away from New York to a different country as well, 00:07:32.120 --> 00:07:34.079 and that must have had some issues. 00:07:34.920 --> 00:07:36.720 And and this is how teaching continues. 00:07:36.759 --> 00:07:36.800 Yeah. 00:07:36.800 --> 00:07:42.040 I mean, I learn from my wife and my children who probably know me better than most 00:07:42.240 --> 00:07:45.040 and know when I am scared to take a risk. 00:07:45.600 --> 00:07:46.600 And they encourage me. 00:07:46.639 --> 00:07:47.720 And that decision. 00:07:47.759 --> 00:07:51.680 You know, answering in a full fledged way when I was called to be CEO, I have to thank my wife. 00:07:52.480 --> 00:07:57.120 Who said that, you know, I should take a risk at a different organization. 00:07:57.519 --> 00:07:59.079 I never thought I'd end up being CEO. 00:07:59.720 --> 00:08:04.839 So I was taking not taking much domain risk in terms of the risk organization. 00:08:04.879 --> 00:08:10.079 But I was, as you say, taking institutional risk and a cultural risk 00:08:10.279 --> 00:08:12.399 moving from an American organization to a British one. 00:08:12.720 --> 00:08:14.600 Even though a one which has a huge US presence. 00:08:14.959 --> 00:08:17.160 Well, you've gone from strength to strength at Barclays. 00:08:17.199 --> 00:08:22.240 I mean Barclays spans many asset classes internationally. 00:08:22.279 --> 00:08:25.399 Huge presence obviously, in Europe and and in North America. 00:08:25.839 --> 00:08:29.639 I guess sitting where you do you've got a wonderful ability 00:08:29.639 --> 00:08:34.039 to look out and say what feels like the right level of risk to take 00:08:34.120 --> 00:08:37.919 as well as areas to perhaps encourage activity. 00:08:38.159 --> 00:08:39.559 I think there are - 00:08:39.559 --> 00:08:44.240 and and we can talk about risks bothin terms of business and how we do business. 00:08:45.440 --> 00:08:51.679 The risks which I think are very well rewarded over time, 00:08:51.759 --> 00:08:54.559 are to take exposure to technology 00:08:54.639 --> 00:08:58.440 both in terms of technology companies, funding technology companies, 00:08:59.000 --> 00:09:02.919 and adopting and using technology inside the organization. 00:09:03.200 --> 00:09:04.879 If you do it quickly and you do it well, 00:09:04.919 --> 00:09:06.960 and you may make mistakes, but it pays off. 00:09:07.960 --> 00:09:11.879 The second thing is to take risks on individuals. 00:09:12.480 --> 00:09:13.039 Yeah. 00:09:13.159 --> 00:09:15.919 As well as businesses, especially small businesses. 00:09:16.279 --> 00:09:16.840 Okay. 00:09:16.879 --> 00:09:20.440 They all have the drive and they are on an arc of success. 00:09:20.720 --> 00:09:24.279 Not everybody will, you know, turn out to be a great credit, 00:09:25.000 --> 00:09:29.519 but by and large, you can understand the numbers well enough to make it work. 00:09:30.600 --> 00:09:34.399 Then when you come to large businesses, you've got to take a risk 00:09:35.039 --> 00:09:39.200 where you understand the business and see if they're doing the same thing, 00:09:39.799 --> 00:09:45.440 whether they are themselves investing in their own people in a consumer business and using technology. 00:09:45.519 --> 00:09:48.000 If all those skilled things come together, 00:09:48.000 --> 00:09:51.679 and it applies just as much to countries as it does to individuals and companies, 00:09:52.519 --> 00:09:54.159 then I think those are risks worth taking. 00:09:54.799 --> 00:09:54.960 Okay. 00:09:55.240 --> 00:09:56.559 So let's stay with risk for a moment, 00:09:56.840 --> 00:09:59.759 you've had the ability to look at a very senior level 00:09:59.799 --> 00:10:04.720 at colleagues and organizations in both the US and here in the UK. 00:10:04.960 --> 00:10:07.799 Does that sort of I think adopted thesis 00:10:07.840 --> 00:10:11.919 that people in the US take more risk than perhaps colleagues do over here. 00:10:11.960 --> 00:10:12.799 Is that is that fair? 00:10:12.840 --> 00:10:13.679 Is that justified? 00:10:13.919 --> 00:10:15.799 No, I'm not sure that's justified. 00:10:16.080 --> 00:10:18.679 There's a lot that's very similar between London and New York. 00:10:19.279 --> 00:10:21.559 And there're, you know, and it's almost, 00:10:22.080 --> 00:10:25.600 other than driving on the opposite sides of the road, or different sides of the road, 00:10:25.799 --> 00:10:29.440 it's virtually indistinguishable. 00:10:30.039 --> 00:10:33.240 In the way in people which people think in the financial industry. 00:10:33.720 --> 00:10:38.559 It is absolutely true that there is a culture of venture capital 00:10:39.240 --> 00:10:42.799 and a depth of venture capital and private equity in the US, 00:10:42.919 --> 00:10:45.519 which is much greater than in the UK. 00:10:46.399 --> 00:10:49.600 And therefore there is more money to be to be had, 00:10:50.240 --> 00:10:55.240 more people, more more capital to be thrown at early stage ventures, 00:10:55.840 --> 00:10:58.399 and a willingness to tolerate failure. 00:10:58.759 --> 00:10:59.440 Yes. 00:10:59.519 --> 00:10:59.799 Right. 00:10:59.879 --> 00:11:03.960 If you then come to an institution like a bank, right, 00:11:04.039 --> 00:11:06.480 which operates in a different part of the risk/return curve, 00:11:06.600 --> 00:11:07.960 I don't think it's that different. 00:11:08.440 --> 00:11:08.720 That's right. 00:11:08.840 --> 00:11:14.000 I think the UK has been for many, many years taking extraordinary amounts of risk. 00:11:14.039 --> 00:11:17.080 It didn't become the global power it did without taking risk. 00:11:17.320 --> 00:11:20.120 Perhaps some of that, we can talk about it later 00:11:20.679 --> 00:11:25.960 in terms of managing equities, managing their own investments, there can be more of today. 00:11:26.159 --> 00:11:26.960 Well, let's do that now. 00:11:28.240 --> 00:11:30.039 Maybe we should start in a different area. 00:11:30.720 --> 00:11:32.080 We're clearly a pension plan. 00:11:32.279 --> 00:11:37.679 You know, we have to have a risk threshold which really keeps us within boundaries. 00:11:38.240 --> 00:11:40.799 The worst thing we can do is actually have a situation 00:11:40.840 --> 00:11:44.080 where the members can't draw their pension when it's coming due. 00:11:44.159 --> 00:11:48.240 How do you see the pension world in here in the UK versus, say, 00:11:48.279 --> 00:11:51.159 what you've seen from organizations like ourselves in Canada 00:11:51.200 --> 00:11:53.080 and and wider, perhaps in North America? 00:11:53.679 --> 00:11:56.000 So I think over the last 30 to 40 years, 00:11:56.639 --> 00:11:58.159 the biggest difference you notice 00:11:58.279 --> 00:12:01.240 is the culture of equity risk taking in the UK has declined. 00:12:01.399 --> 00:12:04.279 Now, I think lots of academic studies have shown 00:12:04.919 --> 00:12:07.960 that a broad and high exposure to the equity markets, 00:12:08.480 --> 00:12:12.559 Sixtyish percent or more is roughly right for people through their lives. 00:12:12.600 --> 00:12:14.320 It'll change at different points in their lives. 00:12:14.679 --> 00:12:19.399 When I looked at your portfolio at the at your year end results, 00:12:19.559 --> 00:12:22.440 I'll get this roughly wrong, but, you know, 00:12:22.480 --> 00:12:25.440 you've got a fairly high exposure to risk assets. 00:12:25.720 --> 00:12:29.039 You've got, I think, fortyish percent to begin with in public equities, 00:12:29.080 --> 00:12:32.600 and then if you add privates and if you add commodities, 00:12:32.679 --> 00:12:34.320 you know, it gets much higher. 00:12:34.360 --> 00:12:35.840 And then there's a little bit of leverage. 00:12:35.919 --> 00:12:39.080 And so I don't know what your equity beta is to the public market, 00:12:39.159 --> 00:12:43.440 but I imagine it was at 70 - 75% equity portfolio. 00:12:43.480 --> 00:12:48.080 If you look at your typical UK pension plan, it is about 40%. 00:12:48.120 --> 00:12:51.080 Which is, I, in my opinion, less than it should be. 00:12:51.440 --> 00:12:51.559 Okay. 00:12:52.000 --> 00:12:56.960 And I think when you take individuals, it is probably even a lower number. 00:12:57.159 --> 00:13:01.559 If you take their personal balance sheet and add what's the indirected to push it through pensions. 00:13:02.039 --> 00:13:03.879 And I think that has cost the UK. 00:13:04.559 --> 00:13:07.200 It's cost individuals in terms of foregone returns. 00:13:07.559 --> 00:13:08.919 In Barclays, we talk about it. 00:13:09.000 --> 00:13:11.120 We talk about hundreds of billions of pounds 00:13:11.240 --> 00:13:14.759 in checking accounts and savings accounts, which could be invested. 00:13:15.399 --> 00:13:21.399 It's cost UK companies in terms of a lack of investment in the companies 00:13:21.440 --> 00:13:25.279 and capital formation, especially of smaller companies. 00:13:25.360 --> 00:13:28.960 And you can see it in the way in which people talk about the UK equity markets. 00:13:29.200 --> 00:13:29.320 Right. 00:13:29.639 --> 00:13:32.600 They have 330 year old dividend paying banks like us, 00:13:33.320 --> 00:13:34.840 you know, which is fine. 00:13:34.879 --> 00:13:38.039 We are happy to be here, but there should be a lot more tech companies in there. 00:13:38.120 --> 00:13:38.720 Absolutely. 00:13:38.759 --> 00:13:39.159 Yeah. 00:13:39.200 --> 00:13:41.480 One thing I should do as we're going around the world 00:13:41.519 --> 00:13:45.039 is try and get your perspective on the great nation of Canada. 00:13:46.200 --> 00:13:49.919 I know there's been a bit of back and forth of are we the 51st state? Are we something else? 00:13:50.000 --> 00:13:53.519 But where does Canada fit into Barclays view of the world? 00:13:53.600 --> 00:13:56.879 Maybe just share a little bit of that, because I'm sure the viewers would find that interesting. 00:13:56.960 --> 00:13:59.519 Yeah, you know, we've been in Canada for over 90 years. 00:13:59.559 --> 00:14:03.320 And had many distinguished people serve as our chairman in Canada, 00:14:03.360 --> 00:14:06.320 including Michael Wilson, who was a former finance minister of Canada. 00:14:07.000 --> 00:14:10.120 And we've got an investment banking presence in Toronto. 00:14:10.200 --> 00:14:15.240 And we've got a business investment banking business out in Alberta, in Calgary. 00:14:15.840 --> 00:14:19.159 And so we've covered Canada for a very, very long time, 00:14:19.240 --> 00:14:21.440 both out of London and Toronto and of course, New York. 00:14:21.639 --> 00:14:27.120 Look, Canada is in my opinion, sort of not only one of the great nations of the world, 00:14:27.519 --> 00:14:29.159 but a great place in which to do business. 00:14:29.600 --> 00:14:37.879 You have companies that span the very traditional economy from minerals and natural resources 00:14:38.399 --> 00:14:42.559 to the very modern economy, including some very interesting tech companies. 00:14:42.960 --> 00:14:46.919 As well as a robust financial sector. Right? 00:14:47.240 --> 00:14:49.399 Which is itself a force in the world. 00:14:49.440 --> 00:14:53.120 By which I mean, you and the and and the great Canadian pension funds 00:14:53.559 --> 00:14:56.480 as well as the great Canadian banks and insurance companies. 00:14:56.919 --> 00:15:02.039 So Canada, as it looks to diversify from the United States, 00:15:02.519 --> 00:15:06.159 will look either through direct means or indirect means, 00:15:06.679 --> 00:15:08.639 to attract more companies into Canada 00:15:09.279 --> 00:15:12.399 and to move Canadian and have Canadian assets across the world. 00:15:13.279 --> 00:15:15.639 We think that's a great opportunity for Canadians. 00:15:16.440 --> 00:15:17.679 We think Barclays can help. 00:15:18.919 --> 00:15:22.679 And so as a business matter, and as a personal matter, that's very, very important. 00:15:23.440 --> 00:15:25.279 And I would say the other thing is, I mean, 00:15:25.360 --> 00:15:28.480 you've had a change in government relatively recently. 00:15:28.480 --> 00:15:30.919 Prime Minister Carney, of course, knows the UK extremely well, 00:15:31.000 --> 00:15:32.720 having been governor of the Bank of England. 00:15:33.519 --> 00:15:34.919 Having studied here many years ago. 00:15:35.600 --> 00:15:41.000 But you've also had relative stability in your approach to the world. 00:15:41.799 --> 00:15:46.120 Right, we can always say relations with country X or Y have changed a little, 00:15:46.639 --> 00:15:51.799 but looking over a long period, Canada has been one of the most open societies economically, 00:15:52.600 --> 00:15:55.159 and in terms of immigration, and that's your great strength. 00:15:55.360 --> 00:15:58.200 Pleased that you're saying actually that you look favorably on Canada, 00:15:58.240 --> 00:16:01.200 I know it's a big agenda for the federal government to sort of try 00:16:01.240 --> 00:16:06.200 and help find inward capital to support nation building projects. 00:16:06.519 --> 00:16:09.720 That is an important feature to try and build our economy 00:16:10.639 --> 00:16:14.759 and actually also deal with some of the trade negotiations that are likely to come up 00:16:14.840 --> 00:16:18.919 where there'll be sort of some industries where there will be some transition 00:16:19.000 --> 00:16:22.919 or probably tariff changes which will be need to be worked through. 00:16:23.240 --> 00:16:23.360 Yeah. 00:16:24.000 --> 00:16:24.120 Yeah. 00:16:24.519 --> 00:16:26.120 Let's change back a little bit. 00:16:26.200 --> 00:16:31.960 Now, at teachers, we we feel really strongly that having the right values are important. 00:16:32.360 --> 00:16:38.480 We try to make sure as an institution as well as investing in good companies that can grow, 00:16:38.600 --> 00:16:44.960 thrive and help their local communities, we back businesses in the right way. 00:16:45.080 --> 00:16:45.240 Yeah. 00:16:46.000 --> 00:16:50.879 If you were looking within Barclays, which which values are you trying to emphasize for colleagues? 00:16:50.960 --> 00:16:52.759 You said, you know, you can learn from those colleagues 00:16:52.840 --> 00:16:55.360 as well as you can help them to sort of grow and develop. 00:16:56.120 --> 00:17:00.919 But what would you put out as value as you would say are important for your institution? 00:17:01.320 --> 00:17:02.639 So I think there are a couple. 00:17:02.840 --> 00:17:04.160 I mean, look, we are bank. 00:17:04.759 --> 00:17:07.839 So we must always have integrity. 00:17:08.759 --> 00:17:12.640 We must always have or operate with ethics. 00:17:13.680 --> 00:17:15.400 We also serve millions of customers. 00:17:16.160 --> 00:17:18.960 So the thing I always say is 00:17:19.000 --> 00:17:23.000 offer products that are suitable to customers that they can understand 00:17:23.000 --> 00:17:24.559 and that serve a purpose for them. 00:17:25.599 --> 00:17:30.839 And would you want your grandmother to buy, to take mortgage from me? 00:17:30.920 --> 00:17:33.079 Would you want your grandmother to take a credit card from you? 00:17:33.799 --> 00:17:34.480 It's those things. 00:17:35.039 --> 00:17:36.599 You have to be transparent in your dealings. 00:17:37.519 --> 00:17:38.799 And then internally, 00:17:39.480 --> 00:17:43.000 you have to work with your colleagues in an open and ethical way, 00:17:43.599 --> 00:17:47.279 and the most important thing there is to take responsibility. 00:17:47.960 --> 00:17:48.079 Yep. 00:17:48.480 --> 00:17:48.640 Right. 00:17:49.160 --> 00:17:52.400 You have to... And especially to take responsibility when things go badly, 00:17:53.359 --> 00:17:57.440 and you are not the one who had full accountability for what went wrong, 00:17:57.880 --> 00:17:59.279 but take it and fix it. 00:18:00.200 --> 00:18:02.039 And you know, coming back to the equity thing, 00:18:02.720 --> 00:18:06.799 one is a public equity issue about how much equity should you own as part of your portfolio. 00:18:07.480 --> 00:18:12.359 But for the last two years, we've given every employee in Barclays £500 worth of shares. 00:18:12.720 --> 00:18:12.839 Okay. 00:18:12.960 --> 00:18:13.160 Right. 00:18:14.359 --> 00:18:14.920 In the company. 00:18:15.440 --> 00:18:17.160 Now, thankfully, the stock has done well, 00:18:17.400 --> 00:18:23.119 but part of it is to make them understand that their values and their behavior 00:18:23.920 --> 00:18:27.319 affect the bottom line and they themselves identify with it. 00:18:27.799 --> 00:18:28.519 That's a good idea. 00:18:28.720 --> 00:18:28.839 Yeah. 00:18:29.480 --> 00:18:31.160 So genuine stakeholder engagement. 00:18:31.200 --> 00:18:32.119 Genuine stakeholder. 00:18:32.680 --> 00:18:36.880 So it'd be remissing me not to ask you the Jamie Dimon question, so let's get that one out. 00:18:36.960 --> 00:18:41.880 Which is to say, you know, credit's had its moments recently where people have said, 00:18:42.599 --> 00:18:44.640 is it really giving us what we need? 00:18:45.920 --> 00:18:46.759 How do you see credit? 00:18:46.759 --> 00:18:51.559 And particularly this point about how you understand well enough what you're investing in? 00:18:51.680 --> 00:18:51.799 Yeah. 00:18:52.279 --> 00:18:53.960 So I think it's it's two things. 00:18:54.359 --> 00:18:56.640 First of all, I've grown up in the fixed income markets. 00:18:57.319 --> 00:18:59.960 So I've had to deal with credit in good days and bad days. 00:19:00.400 --> 00:19:02.119 There is inevitably risk in credit, 00:19:02.480 --> 00:19:08.200 because no matter how much you study a company or a country or an individual, 00:19:09.039 --> 00:19:10.119 circumstances change. 00:19:10.960 --> 00:19:12.200 You lend for a long time, 00:19:12.880 --> 00:19:15.480 you try to make provisions for those changes of circumstances. 00:19:15.759 --> 00:19:19.160 You hope that the pooling effects of portfolios help you, 00:19:19.720 --> 00:19:21.279 so that there are only a few bad eggs. 00:19:21.720 --> 00:19:24.480 And that's what what gives you the return for the risk you're taking. 00:19:25.240 --> 00:19:27.039 And those processes you have to adhere to. 00:19:27.559 --> 00:19:29.680 I sort of have two rules of risk management: 00:19:30.400 --> 00:19:34.599 Rule number one is you should never lose more money than you thought. 00:19:35.400 --> 00:19:36.920 And if you do, that's a problem. 00:19:37.680 --> 00:19:41.480 And you should never lose money in a way you had not anticipated. 00:19:42.319 --> 00:19:43.640 So you should understand the risks. 00:19:44.559 --> 00:19:49.160 And I think most forms of lending allow you to understand the borrower 00:19:49.200 --> 00:19:50.440 and the borrower's circumstances, 00:19:50.519 --> 00:19:51.880 whether it's a company or an individual, 00:19:52.519 --> 00:19:55.000 and make reasonable forecasts for what happens. 00:19:55.839 --> 00:19:59.440 If you're dealing with more opaque companies or opaque business models, 00:20:00.559 --> 00:20:03.000 and especially in parts of technology 00:20:03.039 --> 00:20:06.759 where you're making assumptions about technological growth, it is harder. 00:20:07.440 --> 00:20:10.240 In which case you should be compensated for the risk. 00:20:10.279 --> 00:20:14.400 The most important thing is when can you not understand the risk? 00:20:15.279 --> 00:20:16.880 And then you have to be really careful. 00:20:17.519 --> 00:20:23.559 So, you know, we've had a in the book, an exposure to a couple of frauds. 00:20:23.599 --> 00:20:25.480 And the interesting thing about those two frauds. 00:20:25.559 --> 00:20:27.960 One was in the US, one was here in London. 00:20:28.519 --> 00:20:33.119 The interesting thing about those frauds was from the point of suspicion - 00:20:33.240 --> 00:20:35.240 that there might be a fraud - to understanding it, 00:20:35.359 --> 00:20:39.920 it took forensic accountants many days to actually figure out what happened. 00:20:40.680 --> 00:20:44.039 So if that's the case, especially for smaller companies 00:20:44.079 --> 00:20:46.559 with weaker business morals and financial controls, 00:20:46.920 --> 00:20:50.680 which are not, you know, to the highest levels of highest standards, 00:20:51.640 --> 00:20:53.559 it's very hard for a lender to know in advance. 00:20:54.039 --> 00:20:54.200 Right. 00:20:54.759 --> 00:20:56.440 So you sort of say, there be dragons. 00:20:56.720 --> 00:20:57.519 I'm not going nearby. 00:20:58.079 --> 00:20:58.240 Right. 00:20:58.880 --> 00:21:05.680 And I think every generation and credit is doomed to sort of learn those lessons again. 00:21:06.720 --> 00:21:10.359 And I watched it, I entered this industry in 1994. 00:21:10.480 --> 00:21:12.960 I watched it in the emerging markets in 1994. 00:21:13.240 --> 00:21:16.200 Again in 1997, the dot.com in 2001, 00:21:16.640 --> 00:21:18.640 the financial crisis in 2008. 00:21:19.200 --> 00:21:21.880 Europe, COVID, it goes on. 00:21:22.119 --> 00:21:22.240 Right. 00:21:22.599 --> 00:21:23.279 Great analysis. 00:21:23.319 --> 00:21:24.759 So let let's go back to one other thing. 00:21:24.799 --> 00:21:27.359 You've you mentioned a few times and it would be remiss of me 00:21:27.400 --> 00:21:31.240 not to get your perspective on this big topic which is technology 00:21:31.319 --> 00:21:36.799 and inevitably within technology, the discussion of the day is still AI. 00:21:36.960 --> 00:21:37.200 Yes. 00:21:37.880 --> 00:21:41.400 A lot of debate about how best to to use AI. 00:21:42.000 --> 00:21:45.319 So is it essentially a way of actually making your business more efficient? 00:21:46.400 --> 00:21:49.160 Is it a way of actually making your business more effective? 00:21:49.839 --> 00:21:52.680 And within the more effective, how much can you use AI 00:21:52.759 --> 00:22:00.599 to really make decisions that a human probably is less well suited or able to consider? 00:22:00.960 --> 00:22:02.359 So where do you sit on that continuum? 00:22:02.440 --> 00:22:03.920 Because there's a range of views here 00:22:04.039 --> 00:22:07.880 and I think a lot of the more immediate benefits we've seen 00:22:07.880 --> 00:22:11.720 have probably been in the cost-out efficiency side than actually the latter point, 00:22:11.759 --> 00:22:14.319 which is can we make better choices? 00:22:14.960 --> 00:22:16.200 The honest answer is I don't know. 00:22:18.200 --> 00:22:25.400 What I think I do know is that it will give you benefits by making operations better 00:22:25.559 --> 00:22:28.039 and by improving the way you serve your customers. 00:22:29.640 --> 00:22:31.519 And I think there are three elements of this. 00:22:32.720 --> 00:22:34.440 One is, how do you get adoption? 00:22:35.519 --> 00:22:37.759 So do you provide the tools to your organization? 00:22:37.960 --> 00:22:39.559 Do you train them in the using of the tools? 00:22:39.599 --> 00:22:41.440 And are you actually seeing them use it? 00:22:41.480 --> 00:22:42.000 Yep. 00:22:42.039 --> 00:22:42.079 And 00:22:42.079 --> 00:22:42.319 Right. 00:22:42.480 --> 00:22:45.839 One of the one of the interesting things, mystery even, 00:22:46.519 --> 00:22:50.160 is people are using this much more in their personal lives than they are in their corporate lives. 00:22:50.240 --> 00:22:53.880 You know, you always click on the AI thing in Google to get your answer. 00:22:54.039 --> 00:22:55.039 So adoption is one. 00:22:55.720 --> 00:22:58.200 The second thing is infrastructure, right? 00:22:58.319 --> 00:23:00.079 Are you getting the data in the right way, 00:23:00.119 --> 00:23:03.000 the right format with the right compute platforms, et cetera? 00:23:03.680 --> 00:23:04.680 to be able to use it? 00:23:05.359 --> 00:23:07.319 And the third and large organizations is, 00:23:07.480 --> 00:23:13.799 can you genuinely find high value use cases where you throw the old 00:23:14.440 --> 00:23:16.200 and you use the new, and you trust it. 00:23:16.640 --> 00:23:17.519 That's the hardest spot. 00:23:18.279 --> 00:23:19.359 We are trying to do all three. 00:23:19.640 --> 00:23:19.799 Right. 00:23:20.599 --> 00:23:24.720 Now, we are finding cases where you just do a job better. 00:23:25.079 --> 00:23:31.440 For instance, we have a way now of monitoring the transcripts of all of our customer service calls 00:23:31.839 --> 00:23:33.640 to give feedback to our customer service agent. 00:23:34.160 --> 00:23:36.920 Instead of just sampling two or three calls. 00:23:37.000 --> 00:23:39.160 That doesn't reduce the number of people, 00:23:39.200 --> 00:23:43.079 but it actually hopefully makes for a better customer service experience 00:23:43.119 --> 00:23:46.400 and a customer service process, because we can look at everything. 00:23:46.559 --> 00:23:52.000 Well, I think we also have the anxiety a little bit at the moment, 00:23:52.119 --> 00:23:57.079 which is given the power and the sophistication of AI models, 00:23:57.759 --> 00:24:02.640 How can you make sure that you're software secure from third parties? 00:24:02.920 --> 00:24:08.440 Or even partners you're working with where their platform actually has vulnerability? 00:24:08.599 --> 00:24:14.839 So, you know, I'm sure most boards in their governance looking at either either of our businesses will be saying, 00:24:14.920 --> 00:24:18.759 you know, how quickly can we get an answer to that pretty important question? 00:24:19.240 --> 00:24:21.279 Look, it's a very deeply important question. 00:24:21.599 --> 00:24:25.559 But basically, just as the work you do can be getting faster, 00:24:26.240 --> 00:24:29.039 the work that people can do against you is getting faster, 00:24:29.079 --> 00:24:31.160 which means your defenses have to become faster. 00:24:31.480 --> 00:24:31.720 And better. 00:24:32.519 --> 00:24:37.440 The important thing here is to use the tools we have available. 00:24:38.200 --> 00:24:39.400 And there'll be newer tools. 00:24:39.920 --> 00:24:43.720 But I think t to try to understand our own vulnerability. 00:24:44.279 --> 00:24:48.400 Curiously, what it seems to be pointing out 00:24:48.480 --> 00:24:51.759 is one of the areas of greater vulnerability is open source code. 00:24:52.680 --> 00:24:56.519 Which is one of the things that has made programming much more efficient in the last few decades. 00:24:56.599 --> 00:24:57.039 That's right. 00:24:57.079 --> 00:25:00.359 Because the ability to go and use standardized code, 00:25:01.000 --> 00:25:02.880 borrow it from websites and so on. 00:25:03.920 --> 00:25:07.079 But those are the places where if a vulnerability is found, 00:25:07.680 --> 00:25:09.519 it can impact the greatest number of people. 00:25:10.000 --> 00:25:13.799 So does it then make people turn more inwards 00:25:13.920 --> 00:25:16.000 to their own programming as a form of defense? 00:25:16.839 --> 00:25:17.000 Right? 00:25:17.119 --> 00:25:18.720 And then coming back to your previous question, 00:25:19.079 --> 00:25:20.960 does that therefore mean you need more coders? 00:25:21.200 --> 00:25:21.960 Yes, right. 00:25:22.000 --> 00:25:26.000 The reality is all companies today 00:25:26.000 --> 00:25:31.440 are interacting with their customers, much, much, much more digitally than they ever did. 00:25:32.000 --> 00:25:36.000 Whether it is to sell their products, whether it is to accept payments, 00:25:36.000 --> 00:25:40.000 and therefore, the digital defenses are that much more important. 00:25:41.000 --> 00:25:44.000 And I think these things are very worrying 00:25:44.000 --> 00:25:48.480 and it's important for companies to reactact quickly for us to cooperate in safe ways. 00:25:48.480 --> 00:25:50.599 In the banking system, we feel this. 00:25:52.000 --> 00:25:57.000 But it is probably going to be even more important in board discussions going forward. 00:25:57.000 --> 00:26:00.000 And certainly we see that with our members because they do a lot 00:26:00.000 --> 00:26:04.000 more digitally now and we're trying to make sure that they're comfortable, 00:26:04.000 --> 00:26:08.000 safe and able to get good quality answers to their issues. 00:26:08.000 --> 00:26:11.640 Probably to conclude if I could, for a bit of fun, 00:26:12.000 --> 00:26:15.000 probably to help everybody get to know you a bit better, 00:26:15.000 --> 00:26:17.680 I thought I'd ask you a few rapid fire questions. 00:26:18.000 --> 00:26:19.319 Oh my God. 00:26:19.319 --> 00:26:21.000 So just say the first thing that comes to your mind. 00:26:21.000 --> 00:26:24.759 Which of these two you would you would choose if you had the choice. 00:26:25.000 --> 00:26:26.559 So some of them very easy. 00:26:26.559 --> 00:26:27.160 So cat or dog? 00:26:27.160 --> 00:26:27.799 Cat. 00:26:27.799 --> 00:26:29.000 Beach or city? 00:26:29.000 --> 00:26:29.920 Beach. 00:26:29.920 --> 00:26:31.799 Beer or wine? 00:26:31.799 --> 00:26:33.000 Beer. Non-alcoholic. 00:26:34.000 --> 00:26:36.000 Theater or cinema? 00:26:36.000 --> 00:26:37.240 Cinema. 00:26:37.240 --> 00:26:38.960 And last one is 00:26:38.960 --> 00:26:40.480 Pub or karaoke? pub any day. 00:26:40.480 --> 00:26:41.599 Pub, any day. 00:26:42.000 --> 00:26:42.680 Great. 00:26:42.680 --> 00:26:46.000 Now, look, I should say thank you so much for joining the podcast today. 00:26:46.000 --> 00:26:48.000 It's been fascinating listening to your views. 00:26:48.000 --> 00:26:50.000 You have a very 00:26:50.000 --> 00:26:54.000 insightful perspective of the financial industry 00:26:54.000 --> 00:26:58.000 and you're leading a really important establishment, 00:26:58.000 --> 00:27:01.000 particularly in the UK, but certainly internationally as well. 00:27:01.000 --> 00:27:04.000 We've said it both to each other, but we've had a great working relationship 00:27:04.000 --> 00:27:08.000 together and that's really appreciated by by our team. 00:27:08.000 --> 00:27:12.000 And wish you well as we go out into the future. 00:27:12.000 --> 00:27:14.640 Thank you for joining today and I do hope that you'll be 00:27:14.640 --> 00:27:18.000 able to join us again soon on another one of our podcasts. 00:27:18.000 --> 00:27:19.599 We hope you enjoyed this episode. 00:27:19.599 --> 00:27:22.000 Please subscribe and follow us wherever you get your podcasts.