Antony Jenkins fired: Investors cheer Barclays' shock move to get rid of chief executive

New chairman John McFarlane to take over while replacement is sought

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The Independent Online

Shares in Barclays surged after the shock sacking of chief executive Antony Jenkins just hours before the Budget, in a move worth nearly £1bn to the bank’s shareholders.

Barclays shares rose nearly 5 per cent on the news, before ending up 2 per cent, or 5.15p, at 257.3p, adding £864m to its market value. Shares in the other big UK banks were either flat or falling as investors sat on their hands ahead of the Budget.

Mr Jenkins, a retail banker who previously ran Barclaycard, had been in the job for just three years, having been hired to replace the high-profile American investment banker, Bob Diamond. Mr Diamond lost his job as a result of the public firestorm created by the Libor scandal.

It was partly a perceived lack of focus on the investment bank among his boardroom colleagues that put paid to Mr Jenkins’s time at the top.

His executive responsibilities will be assumed by the incoming chairman John McFarlane while a replacement is sought. He undertook a similar job at Aviva in the months between the departure of Andrew Moss and the hiring of the current boss, Mark Wilson.

There were also rumblings at Barclays about a lack of focus and on cost-cutting, seen as under-ambitious, in addition to concerns over the investment bank, which Barclays would still like to see handling big ticket work for global clients. Matters are understood to have come to a head at a series of boardroom presentations a month ago, although the discontent stretches back further than that.

The 67-year-old Mr McFarlane, who replaced Sir David Walker as chairman in April, said bluntly that Barclays was “not efficient” and also attacked the 375 different management committees in operation at the bank.

Mr McFarlane told Mr Jenkins of his fate last week. “He was incredibly professional about it,” Mr McFarlane said.

“It is a complete coincidence this has come out on the day of the Budget.

“It became clear that existing management plans had shareholder value creation too far out in the future. Barclays shares stand where they did six years ago and the dividend is flat.”

The bank said Mr McFarlane had been offered an increase to his £800,000 fee for taking on the executive role, but had refused extra remuneration. Some £100,000 of that fee is paid in shares.

Sir Mike Rake, the deputy chairman, said he had “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.”

While the decision to make the announcement on Budget day might have been described as a coincidence, Barclays has form on that front.

Back in 2013 it announced a controversial plan to pay its top bankers – including the since departed investment banking chief Rich Ricci – £40m in bonuses on the day of a previous Budget.

Mr Jenkins’s pay-off will be rather more modest, but he will still leave with £3m and be eligible for future releases from the long-term incentive plan for work done in previous years.

Mr Jenkins was paid £5.5m last year. He also owns 4.16 million Barclays shares and has a further 7.36 million due to him under those previous bonuses, which are worth a combined £29.8m.

In the bank’s statement he said: “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.

“Our capital position is much stronger, our business model is more balanced, we are much more disciplined on cost management, we have made good progress in rebuilding our reputation and we are seen as a leader in the application of technology to our business.”

Mr McFarlane did not say whether there would be an increase in job cuts as part of plans to improve returns to shareholders, but there was immediate speculation that this would be the inevitable outcome, with the possibility of further branch closures too. 

While the bank said its strategy would not change, Mr McFarlane said that he has already met the group executive management to agree a “much more urgent and stronger programme starting from yesterday”.

This includes “proposals from the investment bank”, that underperformed badly in 2014, and which Mr McFarlane said he “fully endorsed”.

In the meantime a search for a replacement is under way, with Tushar Morzaria, the finance director with whom Mr McFarlane will work closely over the coming days, seen as the leading internal candidate.

However, the bank is thought more likely to bring in an outsider if it can. Mr McFarlane has stated that whoever takes the job will have familiarity with investment banking, although they will not have to have run one.