Mc the knife?
Barclays’ new chair ticks all the right boxes. The UK bank has hired Aviva Chairman John McFarlane to run its board, taking over from David Walker. It’s an unusually positive moment in Barclays’ post-crisis transformation.
Since the departure of Chief Executive Bob Diamond after the Libor scandal in 2012, Barclays’ turnaround has stuttered. New CEO Antony Jenkins’ efforts to get a grip have been hampered by misfortune – a regulatory volte-face on capital last year – and self-inflicted howlers such as paying big investment bank bonuses in spite of preaching restraint.
Barclays is working through its troubled past. Hence Walker’s replacement needed to be an outsider, and someone capable of being tough with the management team, and with Jenkins in particular. Ideally, the appointee would also have investment banking experience and have run a big financial institution.
This makes McFarlane a good catch. He ran one of Australia’s biggest banks for a decade, and earlier worked on the trading floor at Citicorp. He has spent the last few years reinvigorating Aviva, where he showed his teeth overseeing the replacement of the CEO and launching a new strategy. The insurer’s shares delivered a 33 percent total return over the last year. McFarlane’s time as a Royal Bank of Scotland non-executive isn’t a blot either: he arrived after the Fred Goodwin era.
While McFarlane isn’t officially joining until the spring, he used a similar interim period to good effect in his current role. The coming months could be hugely testing for Barclays, including the expected result of investigations into Barclays’ Qatari capital-raisings back in 2008. The bonus round will also be a very public test of whether Jenkins can put his money where his mouth is on investment bank strategy and pay.
The big question for McFarlane is whether Jenkins should remain as CEO. The answer could still be yes. Jenkins has recovered some credibility after accelerating investment banker cuts in May. With McFarlane’s support, he ought to be able to transform Barclays with real energy and authority – the key deficits thus far. Jenkins knows what will happen if he squanders the chance.