‘Mack the Knife’ in Barclays hot seat
Optimism and shares rise after Scot McFarlane is chosen to replace Jenkins
THE appointment of John “Mack the Knife” McFarlane as executive chairman at Barclays has sparked modest hopes from investors for a faster turnaround at the bank.
Barclays shares climbed by over two per cent, up 5.15p at 257.3p, after the 68-year-old Scot, appointed chairman in April, effectively installed himself in the hot seat to replace Antony Jenkins, who has left the bank with a £2.4 million pay-off.
It will be the second such high-profile assignment for Mr McFarlane, who took on the executive chairman role at Aviva following the sacking of Andrew Moss in 2013.
The Dumfries-born accountant has only just stepped down as chairman of Aviva, and also of FirstGroup after less than a year, in order to give his full attention to the Barclays role for which he was unveiled last December.
When he took over, Mr McFarlane immediately signalled his intention to speed up the bank’s turnaround programme, and analysts said his hands-on track record was already kicking in.
Mr McFarlane revealed that Barclays non-executives had been concerned for some time about the style of leadership of Mr Jenkins. The chairman said he had brought things to a head last week, and the chief executive’s exit had been confirmed at a board meeting late on Tuesday.
Under Mr Jenkins, shareholder value creation had been pushed “too far into the future”, Mr McFarlane told a conference call. The bank was in no rush to appoint a successor and the priority was to make the right appointment, he said, adding that the board would be looking for someone with investment banking expertise.
Mr Jenkins was the bank’s retail banking director before being shunted across to replace a belea- guered Bob Diamond three years ago, after Barclays was hit with a record £290m fine over the Libor manipulation scandal.
He walks away with a year’s salary of £1.1m, shares worth £950,000, a pension allowance of £363,000, and other benefits, and will remain eligible for a pro-rata performance bonus for the current year.
The Barclays finance director was immediately installed as the favourite to succeed him. Tushar Morzaria was lured in July 2013 from JP Morgan Chase’s corporate and investment banking division, and is said to have struck up a strong relationship with Mr McFarlane since he took up the position of chairman. Close behind him in the betting is another internal candidate Jonathan Moulds, the former Bank of America Merrill Lynch executive who was appointed to the newly created role of chief operating officer in January.
Bookmakers listed the likes of Mr Diamond, former RBS chief Stephen Hester, and the current RBS boss Ross McEwan, among the less likely candidates.
Mr Jenkins had presided over steep cuts to the investment banking operations involving hundreds of job losses, a period of lacklustre results, and uncertainty about the bank’s structure.
In a statement, deputy chairman Michael Rake said the board had decided Mr Jenkins did not have the blend of skills required to take the company forward.
He said: “We are leaving value on the table and a new approach is required. As a group, if we aspire to bring shareholder returns forward, we need to be much more focused on what is attractive, what we are good at, and where we are good at it.
“We therefore need to improve revenue, costs and capital performance. We also need to become more externally focused and deal with the internal bureaucracy by becoming leaner and more agile.”
One senior Barclays executive said the move was seen positively by its investment bankers, noting Mr McFarlane had recently told staff of his commitment to the business.
Analysts at brokerage Shore Capital said in a note: “This announcement was not something that we have expected, but given John McFarlane’s history as a ‘hands-on’ chairman, it is perhaps not a big surprise.
“If this move does indeed act as a catalyst for an accelerated improvement in Barclays’ financial performance, then this can only be a good thing.”