Barclays chief axed over growth
The chairman of Barclays said chief executive Antony Jenkins was fired after lacklustre revenue growth as the banking giant's shares remain at the level they were six years ago.
Recently hired chairman John McFarlane, who is taking over duties from Mr Jenkins as executive chairman on an interim basis, said the bank needed a new leader to speed up change after it had become "cumbersome".
Barclays confirmed Mr Jenkins had already left the bank, with reports suggesting the former chief executive fell out with the board over strategy and the pace of cost cutting.
Shares in Barclays jumped 3% after the announcement.
Mr McFarlane said Mr Jenkins had handled the bank's management and image crisis "brilliantly" since his appointment three years ago after the Libor rate-fixing scandal.
But he added: "That phase is now over."
Mr McFarlane said the bank needed "more rapid revenue growth".
He said: "The share price of the bank is the same at it was six years ago, and our dividends are low and flat."
Mr McFarlane added that the lender also had to improve its cost control and capital performance.
He said: "We have 375 management committees at Barclays. We are too cumbersome, and need to become leaner. Our senior managers tell us there is too much bureaucracy, and they want to be trusted to make decisions."
Mr McFarlane met his senior managers yesterday and said they had already "pushed the button for growth" on a number of areas across the bank's commercial and investment banking operations.
He said he would outline the group's new strategy at its interim results on July 29.
Mr McFarlane - who will officially become executive chairman on July 17 when he retires as chairman of bus and train operator FirstGroup - said Mr Jenkins had began to lose the confidence of his non-executive board two weeks ago, when "rumblings of concern" arose over the pace of revenue growth.
Mr McFarlane said he told Mr Jenkins he had to go last week, with the board ratifying the decision last night.
Deputy chairman and senior independent director Sir Michael Rake 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."
Mr Jenkins became chief executive in August 2012, replacing Bob Diamond, who left the bank after its involvement in the Libor scandal, which saw banks attempt to fix the key interest rate.
When Mr Jenkins took the top job he promised to bring a new culture of decency to the bank, although the lender now says it must improve its commercial performance.
Mr Jenkins will leave with 12 months' notice and will receive his current annual salary of £1.1 million, £950,000 in role-based pay and a pension of £363,000 a year.
He 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."
He added: "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 has a reputation as a decisive chairman. He was at insurer Aviva in 2012 when it axed its boss Andrew Moss due to the underperformance of the business.
He then also acted as executive chairman until the insurer found its new chief executive, Mark Wilson.
Shore Capital analyst Gary Greenwood said: "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."
Mr McFarlane said with his "fresh perspective" he could see that Barclays has first-class retail, commercial and investment banking businesses.
But he added: "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."
Mr McFarlane said he would develop a more growth-orientated strategy, which the new chief executive would have to follow.
He said: "Strategy is a board decision, and the new chief executive and I, as chairman, will have to agree on changes to this."
Finance director Tushar Morzaria is considered a front-runner, impressing investors since he was poached from JPMorgan two years ago.
Mr McFarlane said Barclays was in no hurry to find a chief executive, but added that the new head will need to know a lot about investment banking, which has in the past been an engine of growth for the bank.
However, under an incoming banking regulation published yesterday by City watchdog the Prudential Regulation Authority, a chairman cannot be chief executive at the same time.
This rule comes into effect next March, suggesting Barclays will need to have a new boss in place within eight months.
Mr Jenkins has a background in retail banking, which is considered a much safer area of activity.
But Keith Bowman, equity analyst at Hargreaves Lansdown, said: "Mr Jenkins's lack of investment banking experience may have proved a factor in today's announcement, with a more rounded leader now required."
He added: "The departing chief executive's expertise in retail banking followed the previous chief executive's in investment banking and now arguably leaves the bank at something of a crossroads."
Some brokers say Barclays should take this opportunity to raise £4 billion to £6 billion from a rights issue to strengthen its capital position.
But Mr McFarlane said the group has no plans to raise capital, adding the bank can strengthen its cash base by making better use of the capital already at its disposal.