Francesco Ceccato - Chief Executive Officer at Barclays Europe

0:07Francesco Ceccato: Hello, listeners. My name is Simba Lee, and welcome back to another episode of the LSE Focal Point podcast. Today, we are delighted to be joined by Francesco Ceccato. Francesco is the CEO at Barclays Europe. He holds a BA in Philosophy, Politics and Economics from the University of Oxford and an MSc in Economics and Philosophy from the London School of Economics. He began his career in corporate finance at Lazard before moving through roles at G Capital, Bear Stearns, and JP Morgan across principal investing and financial institution banking. He joined Barclays in 2010, where he led corporate development and strategy for nearly a decade, before being appointed CEO of Barclays Europe in 2020.

0:45Francesco Ceccato: Francesco, it's a pleasure to have you with us today. Let's start with the first question. This is quite a generic one, but could you please walk us through your career journey and what ultimately led you to becoming CEO of Barclays Europe? What I'd say is that the journey really began back when I was at school. I was in a German-speaking boarding school in the Alps, and I was there when the first and the second stock market crashes happened, 1987 and 1989. You had a lot of news stories about these things, and I first got really interested in the financial markets. I, prior to that, wanting to understand what private banking was, I did my very first apprenticeship at 16.

1:32It was an abbreviated program at Julius Baer. And then in my year between school and university, I spent a number of months at Deutsche Bank Switzerland in Zurich. And so all of that put together probably marked out a course for me that took me then into finance later on in my career. I think what was really interesting to me is just how the economy became real through finance. It became tangible. It became part of people's lives, how they cared about their legacies, how they cared about how they were managing their wealth, and how they were thinking of providing for their families and private banks and financial markets.

2:14And indeed, as I've later found out, investment banks, retail banks, all contributed to that infrastructure to help plan and manage your wealth. So that was the origin of it. And when I concluded my university studies, as you said, I began in corporate finance. And that was really because I was very interested to see how corporate control transfers and passes and the pricing of corporate control in the M &A space. I spent seven years at G Capital when the company was really still expanding in terms of its financial institutions activity. And we were building up G Capital by acquisition, really.

2:57Indeed, the job I had before this one was as co-head of the financial institutions group for Europe and Middle East at Barclays. And that was a role that brought together working for clients, but working in the financial institutions that had fascinated me from an early age and brought me then into the fold also of the biggest financial institutions that are clients of Barclays. and was able to help progress the status of that franchise into a market position that I was happy with, after which I was asked to become the second CEO of Barca's Europe post-Brexit. It became clear to me that this would be such a great way to progress my career, having worked for financial institutions, having tried hard over the years to understand them, to now being able to lead one.

3:52Francesco Ceccato: So for young people today, where would you recommend people to start working at and start university? And is there a preference for you? I think clearly it would be wrong to say that reputations of institutions don't matter. They do. But at the same time, never believe that life is a one-way street. And so I think it's all about finding what you love, finding what you can be passionate about, and pursuing that so that you never get bored. You never get bored. You're always motivated. That makes you motivated to learn more, to do better at your job, to serve your clients better and to ultimately become a more accomplished professional.

4:36So I think that's what I would recommend. Also, I would recommend don't stress out too much about your choice of degree. My own second degree was really driven by indecision as to what to do professionally. That's how I wandered into an MSc at the LSC. But the reality is that that's not the determining factor. and you can learn so much by doing a job that you'll never learn through books. I'm not prescriptive about where or how long. I'm prescriptive about the trial and error of figuring out what really gets you going, what really gets you up in the morning and motivated to take that tube journey.

5:19Working has a lot of satisfaction for me and I hope for many of those who work. Amazing.

5:26Francesco Ceccato: A lot of people in professional finance actually came from the degree you came from, PP at Oxford. And you furthered that degree to doing MSc Economics and Philosophy at LSE. So what really about those subjects contributed to how you view finance, the intellectual grounding that you develop? And to what extent do you think those degrees were really helpful in your professional career? So I think they taught me different skills. And for me, the big intellectual awakening was at Oxford because it has this unique system of the tutorial model that makes you essentially go away for a week with a reading list.

6:06You take out the books that are on your reading list. You try to read as much of them as possible. And then you're asked to write an essay. You're supposed to use the material to build an argument, to build a cogent narrative of what you believe to be a compelling answer to that particular question. When I came to the LSE, I had some brilliant minds in economics teaching me. It was tied into the policy environment of the time, but at the same time was hugely technical. So you were looking at economics from a completely different perspective than the way I was training my intuition in Oxford. So two very different approaches, I think both complementary and both giving me a degree of confidence then to start a career.

6:58Thank you.

6:59Francesco Ceccato: Now I want to pivot on to a bit about your professional career, specifically being the CEO of Barclays Europe. So you started this role during a pandemic lockdown in a foreign city. So do you think you successfully built a culture when you don't have people in the same room as your team? Yeah, it was a real test of leadership. How do I create bonds? How do I create trust in an environment where I can't see people? I can't invite them out for a drink. I can't have a meal with them. I find typically very helpful because if you spend time in some of the different offices we have in Barclays, you will always learn something just by chatting to somebody that you haven't talked to for a long time.

7:42That's not something that you can do in the lockdown environment. And I decided that my way of getting over that problem was to communicate. I was doing a lot of town halls. I was doing a lot of one-on-ones by video conference. I can get some of that rhythm that I learned of remote contact and then following it up when I'm actually in the jurisdiction with some face-to-face contact. This all gets reinforced when you also have a regular rhythm of seeing people virtually, which I continue to need because of the multitude of countries in which you're represented.

8:28Francesco Ceccato: Thank you for sharing that. As the CEO, what is the biggest lesson you took in your life about communication? And what would you advise young people in how to successfully communicate, especially from a leadership position? So I think for a start, as a leader, there is a rule. You cannot overcommunicate. You should use every opportunity. You have stakeholders everywhere. Whether they're your colleagues, your clients, your regulators in my case, your board, your peers in the industry, they all need to be communicated with because every time that you communicate, you transmit your message and at the same time you learn something when you listen.

9:17And it's by listening that you then are able to build a proper worldview that you won't get simply by listening to packaged information that's provided by the media. You get the grainy texture of what is really going on in your professional world. And so without that grainy texture, you can't really lead. I think also communicating is not something that you're born with in terms of the skills. Some people are naturally better at it. Some people are naturally not as good at it. All of them have to learn how to do it better. Clarity of communication is not something that you're born with. You need to practice it.

9:59You need to spend time thinking, how would you want to articulate a thought? And then the other thing to practice in communication is listening. Try to become an active listener. I always listen to conference calls with a notebook and a pen because as the call progresses, I'm able to flip back to perhaps the page earlier where I took a note on something that was said 10 minutes ago and be able to ask a question about it.

10:26Francesco Ceccato: That sounds amazing. And that's a lesson for all of us, definitely. What do you think is the biggest misconception people have from the outside about what it is really like to run a large financial institution? And for you, what is really harder than it looks and what really surprised you when you stepped into this role? As I mentioned, it requires communication. It requires respect for legal frameworks. It requires an understanding of regulatory expectations because you need to align with your regulators as well. It probably requires one or two languages to do it well in order to not have things lost in translation.

11:06Consistency, I mentioned, what does consistency really mean to me? It's about having discipline with respect to the key operating principles that we have within the bank. So when you think about taking risk, allocating capital, engaging with regulators, engaging with clients and colleagues, we need to be consistent. And that consistency is particularly important in times of uncertainty. the uncertain environment outside, you should still be able to deliver a consistent management of risk, a consistent and rational allocation of capital, and still be able to fulfill your regulatory expectations.

11:48I think trust continues to be probably the most important commodity in our industry. Trust is the difference between success and failure in banking. And clearly, what your clients, your regulators, all your stakeholders want is to be able to trust you. And so you need to say what you're going to do and then do it. Okay.

12:11Francesco Ceccato: Amazing. I want to now pivot onto the idea of uncertainty. I feel like as the CEO, there's often times when there is no guarantee that you will know everything and anything about questions people would ask you and situations people would approach you with. So how do you think you successfully respond to uncertainty? And how are you okay with not knowing everything? So I think you have to approach it with a degree of humility. There is no substitute for having the strongest team you can probably have around you. Each experts and competent operators in their particular field. And those operators really should complement your own skill set.

12:55That means you need to be able to select, empower, and trust people to do their end of the bargain. You can't necessarily manage all that uncertainty yourself. And having a strong team is something that I have invested a huge amount of effort in over the years. every time I've had a team to manage, I've made it my most important principle that the talent needs to be at the highest possible level and apt to manage areas that are perhaps weaknesses of my own. That creates the classic, I think it's Coach K that came up with this, five fingers are just five fingers, but when you put them together, they make a fist.

13:43And so for me, that's perhaps the most important thing. What really differentiates institutions is the talent. And that is why I believe that it's perhaps the most important area that I spend time focusing on in order to have the most capable and well-equipped team to deal with that uncertainty, where each member of the team is looking at a different aspect of the bank. But then you also have all the financial risks that we have as a bank. Credit risk. We have treasury risk. We have a market risk. We have so many different risks that we have to patrol in order to be able to retain that trust and the safety and soundness of the bank that comes from being well capitalized and liquid.

14:36it. You need to be conscious of that risk and you need to mitigate it. Thank you for that answer.

14:42Francesco Ceccato: You talked about risk and admittedly, Europe is currently facing a lot of risk. As you articulated in the Davos Economic Forum, you said Europe is navigating fragmented capital markets. It also has a complicated relationship with the US right now and a lot of geopolitical uncertainty in the East, which I'm sure you know about. So from your seat in Dublin of running a major European operation, what you specifically see as the most pressing challenge facing the industry right now? We have a lot of challenges. I think perhaps from my perspective, the navigational challenge of the current geopolitical environment is something that is very much at the top of all our minds.

15:26Clearly, it's not any single geopolitical event or policy decision that's going to change the course of how we manage the bank. I think the important thing is to stay disciplined, to remember what are your guiding principles as you're navigating that. Don't get blown off course because of the uncertainty. Create that discipline. Create the environment for healthy challenge by your risk team, by your compliance team. But at the same time, remember that you can't say no to everything. Right. If you do not take risk, you do not have an enterprise, let alone a bank. Every decision that keeps you in business is a calculated risk.

16:12And at the moment, our capital markets in Europe are fragmented and less liquid than they are the other side of the Atlantic. And that's something that we should make a priority because when a credit cycle happens, and it's been some time since we've had the last credit cycle, There probably is going to be a certain amount of financial tightening by banks simply because they can't take any more risk. That's what we saw during COVID as well. When COVID happened, there were a lot of companies that really believed that this would be a V-shaped recession. and they were able to convince investors, debt investors or equity investors, that the downturn would indeed be followed by a snapback.

17:02And we were able to intermediate business for these clients into the capital markets. By having access to liquid capital markets, you multiply the ability, not just for ourselves, obviously there is a commercial opportunity when we do that intermediation business, but also to help the other actors in the economy to come through the other side. We've seen a little bit of tightening here and there in pockets, but overall, we still have a benign credit environment.

17:33Francesco Ceccato: Okay, thank you for sharing that. Now I want to talk a little bit about another challenge I feel like the general finance industry is facing and Barclays is actively working towards. It's a sustainable energy transition. So as you specifically said, Barclays' target right now is$1 trillion in sustainable and transition finance by 2030. And I want to dive into that a little bit, right? So Barclays invests in transition energy, trying to make unsustainable energy that some firms produce into more sustainable ones, right? So how do you actually determine when a client's transition plan is actually genuine compared to they just wanting to keep a license to do business as usual and not adapting to more sustainable energy?

18:17We, as you say, believe that we have an important role to play in the energy transition. Everything's being powered by electricity. So our energy needs are only going to increase. And that's why I think it's important to diversify our sources of energy, because what we're seeing in these very days is that being overly dependent on one source of energy, which is fossil fuels, has risks. And diversifying and ultimately creating a more sustainable path for the planet in terms of carbon emissions is something that we take very seriously. We all know that this is a dial and not a switch. We cannot switch on and off our dependency on fossil fuels.

19:07We need to dial it down as we diversify our energy base. we want our clients to be on that journey to support the overall energy transition and if we don't see alignment despite engagement dialogue and providing solutions to help the clients on that journey despite providing ways forward for their path to be consistent with ours then at some point it becomes very hard for us to be in business with them.

19:44Francesco Ceccato: Thank you for that answer. Okay, now I want to turn to your advice for students. So what do you think you would advise the students who are listening today, especially ambitious young people when they're trying to break into this industry? So I think I said it at the beginning, I think you have to find something that you can be truly passionate about. you need to use that passion you need to absolutely tap into it in order to motivate yourself to work hard early on and make sure that you are mastering a particular area of the financial services that you decide will be your way forward at least for the next chapter or the next few chapters.

20:33And that can be being a trader in the markets. That can be a corporate finance advisor, as I used to be. It all depends what is the chord that is struck when you enter into the particular area of finance that you might be attempting. And if you feel that it's truly vibrating for you, that chord, then that's your area. And you can draw energy from it and you can give energy to it. And that energy is what helps you become an expert. And the other thing I'd say is take opportunities and be as flexible as you can in order to harness those opportunities. Especially early on, if you're not willing to be flexible, it's going to be hard for you to build up the experiences that will give you the mastery that will then enable you to make choices that are more in favor of other objectives that you might have as an individual.

21:32So I think that's where I would say is take your opportunities wherever they may come. Never compromise on your principles. Try to figure it out. And try to give your career an early boost by channeling that fire, that motivation, at the same time as having due regard for where the opportunities might be, as opposed to simply saying, I want the opportunity to be here. So what I'd say is be motivated, find what motivates you and be motivated, take your opportunities and be flexible.

22:09Francesco Ceccato: Thank you so much for all your inspiring advice and taking your time to share your amazing insights with us. Thank you to our listeners for hopping on another episode and stay tuned for more content.