City: The B factor

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The Independent Online
What is it about Barclays that makes it apparently incapable of seeing itself as others see it? Earlier this year it hired an outside PR consultant, Brunswick, to explain to it why the bank was receiving such a battering from its shareholders and the press. To everyone else the reasons were obvious.

It has failed to restructure its senior management, and it has still not recovered from the damaging publicity it received from last year's dreadful results. You have to assume the blind spot for these failings lies right at the top of the bank.

From about the summer of 1992, several of Barclays' biggest shareholders began complaining about the scheme to combine the roles of chairman and chief executive in the person of Andrew Buxton. For six months, Buxton paid no heed at all. Inevitably, the matter found its way into the press and caused an almighty stink, not only forcing Mr Buxton to split the roles but also doing his reputation irreparable damage.

The City - abetted by Barclays, which has done nothing to scotch the rumour - now believes the bank is planning to announce its new chief executive at its interim results in two weeks' time. We'll see. But if Barclays has not made the appointment by then, it is going to have a lot of angry and frustrated shareholders.

Since it first said it was looking for a chief executive, seven long months have passed. The silence from Barclays has been deafening. Some shareholders have begun to suspect that Buxton and Barclays aren't serious about finding the new man,leaving the chairman to continue in effect as chief executive as well. It is, however, hard to credit this view. Buxton can't be so obtuse as to imagine that he could get away with doing nothing - can he?

So what has Barclays been up to all this time? There is every indication that at the beginning of its hunt for a candidate, the bank couldn't persuade anyone that the job really existed. The new man would be squeezed between Buxton, the executive chairman, and the bank's powerful divisional barons. Who would have wanted to give up a comfortable number to throw themselves into that kind of mess?

Time passed - three months, to be precise. By then it was clear that there were no suitable internal candidates and that other UK bankers either might not fit or didn't want the job. John Tugwell, who missed the top job at NatWest, was a strong tip but he might not have enough gravitas, let alone internal support within Barclays, to be acceptable. Quite a few shareholders would have welcomed Brian Pearce, the saviour of Midland and an old Barclays hand, with open arms. He might have done an excellent job but unfortuantely he didn't seem keen. So Barclays appointed a headhunter to look abroad, particularly in the US.

Yet the same problems remain. The bank needs a real high-flier but cannot offer a convincing enough role to attract a top quality executive. How to solve this dilemma? You remove the chairman, or neutralise him. It would probably be fair to say that some members of the committee (headed by Sir Peter Middleton) in charge of the search for a chief executive were much in favour of this solution.

But Andrew Buxton has shown a truly limpet-like determination to cling on to his post whatever the cost to the bank. He is no doubt hoping that improving results will save his bacon. The interims, however, will show bad debt provisions of more than pounds 1bn (up on the same period last year) and any improvement in performance will be due to better market conditions rather than brilliant management.

There are, in any case, a substantial number of large shareholders who believe that Buxton's reputation is too shot to pieces ever to recover. That both he and his PR team seem unaware of this is quite remarkable but entirely in keeping with Barclays' current management style. Perhaps, therefore, the task of the outside PR consultants should be to advise Andrew Buxton to compose a speech for the coming interims in which he gracefully announces his retirement.