Antony Jenkins has been brutally ousted as the boss of Barclays bank three years after he was promoted to the job in the wake of the Libor scandal.
He is being temporarily replaced by the new chairman, John McFarlane – who has only been in post since April – to clear the way for new leadership to accelerate changes at the business and inject more energy into its operations.
A long-running boardroom row over the future of Barclays’ investment banking side, the business that was built up by his predecessor Bob Diamond, was said to be behind Jenkins’ departure. McFarlane, though, was quick to say that the investment bank was a crucial part of the bank.
The group’s non-executive directors took behind-the-scenes steps through Sir Mike Rake, the most senior independent director, to remove Jenkins after a series of presentations to the board last month in which the current strategy was discussed.
McFarlane said there had been “rumblings” among the non-executives for some time and they had approached him with their concerns. Jenkins’ departure will be cushioned by a payoff of at least £2.5m – before bonuses. He was told last week and the board met on Tuesday night to ratifty his departure.
Barclays shares rose 3% to 260p, bolstered by McFarlane’s assertion that the bank would not need to tap shareholders for cash and despite forecasts by analysts at Bernstein that up to £6bn of fresh capital will be needed.
Sandy Chen, analyst at Cenkos, said: “There’s a new sheriff in town, and he’s got the board’s (and, we assume, the regulators’) backing to make sweeping changes. We have long advocated an aggressive pruning of the investment bank; the time for this, it appears, is now.”
Amid mounting expectations that the investment banking business will be restrained, McFarlane repeatedly stressed the importance of the operation, which was once the powerhouse of Barclays. It has been the focus of repeated rows over bonuses and scandals such as Libor and foreign exchange rigging.
The timing of the announcement evokes memories of 2013 when the bank announced it was paying its top bankers £39.5m in bonuses – including the since-departed Rich Ricci – on the day of the budget. The chancellor, George Osborne, is due to deliver his first budget in a Conservative government on Wednesday although McFarlane insisted the timing was coincidental.
He said more branches would close and jobs would go. “Barclays is not efficient,” he said, pointing out that it has 375 management committees. The bank needed “energy and speed of decision-making”, he said, and managers more scope for freedom of decision-making.
Barclays’ sponsorship of the Premier League will end next year.
The change takes place from 17 July when McFarlane will leave the board of First Group. His promotion to the top job mirrors the role he took on at insurer Aviva during the 2012 shareholder spring when the insurer’s boss was also ousted and McFarlane highlighted this experience to set out his credentials for temporarily taking the helm.
McFarlane said: “Whilst it is unfortunate that I have had little time to work with Antony, I respect and endorse the position of the board in deciding that a change in leadership is required at this time. I would add my personal thanks for everything that Antony has done for us. He can be proud of his heritage, especially his excellent work on culture and values that we will continue. I wish him well.
“Arriving at Barclays with a fresh perspective, it is evident that we have a standout brand with first-class retail, commercial and investment banking businesses. Nevertheless, 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.”
McFarlane said Jenkins’ stratategy was not at issue – last year he set out plans to axe 19,000 jobs – but the speed of change was problem.
Jenkins said: “In the summer of 2012, I became group chief executive at a particularly difficult time for Barclays. It is easy to forget just how bad things were three years ago both for our industry and even more so for us. I am very proud of the significant progress we have made since then.”
Rake, who orchestrated Jenkins’ departure, said: “I reflected long and hard on the issue of group leadership and discussed this with each of the non-executive directors. Notwithstanding Antony’s significant achievements, it became clear to all of us that a new set of skills were required for the period ahead. This does not take away from our appreciation of Antony’s contribution at a critical time for the company.”
Jenkins was promoted from running the retail bank when Diamond was forced out three years ago just days after the bank was fined £290m for rigging Libor. The new chief executive repeatedly said he wanted to make Barclays the “go to” bank. In an attempt to show he was trying to turn around the culture, he had also installed five huge blocks inside the cavernous entrance hall of the bank in Canary Wharf, each one emblazoned with his buzzwords of “respect, integrity, service, excellence and stewardship”.
A full-time successor will be sought externally and internally. Immediate speculation will focus on finance director Tushar Morzaria and Jonathan Moulds, who was recently hired to implement the ringfencing rules that UK banks must comply with to separate their high street banks from their investment banking businesses. McFarlane said he was no hurry and said the candidate would need experience of investment banking.