Not for the first time Barclays has produced a Budget day bombshell. The timing may be unfortunate, but the axing of the chief executive Antony Jenkins is not a huge surprise. The writing on the wall has been there since John McFarlane, the tough former Aviva boss, was named as the successor chairman to City panjandrum Sir David Walker.
Precisely who wielded the knife on this occasion is irrelevant. In contrast to when Bob Diamond was fired, deputy-chairman Sir Mike Rake did not need to be hauled before the governor of the Bank of England this time before committing the act.
Diamond was fired for running an unprincipled investment bank, Barclays Capital, which was so ruthless in its pursuit of profits and personal bonuses that it would stop at nothing including manipulating the Libor interest rate market.
Ousted: Jenkins was always an odd choice as chief executive, says Alex Brummer
We have learned since that this was simply the tip of an iceberg of cheating. One of the factors behind the departure of Jenkins seems to have been his failure to recognise the value of the investment bank at a time when M&A activity and advisory services are booming.
Jenkins was always an odd choice as chief executive. As head of retail his part of the bank was not without stain, including the sale of payment protection insurance and possibly premium credit cards. His much promoted ethical clean-up has never really taken off. The person chosen to lead it, former chief executive of the Financial Services Authority Hector Sants, vanished almost as quickly as he arrived.
What really did for Jenkins’ reputation was the 2014 bonus round. In a year when profits fell by £1.8billion, some £2.4billion was set aside for bonuses, dwarfing the £860million payout for shareholders.
It produced a torrent of criticism. Jenkins passed on his own bonus but his failure to hold the line against the investment bankers was a clear weakness.
The loss of faith in Jenkins was symbolised by the sharp rise in the share price following the sacking. As was the case at Aviva, McFarlane will temporarily take over the role of executive chairman while a successor is found. This is not the first time this has happened at Barclays.
Long before the financial crisis Sir Peter Middleton also took on the role of executive chair after Martin Taylor resigned as a result of Barclays’ involvement in the 1998 meltdown in Russia and Long Term Capital Management.
Among McFarlane’s first gestures as executive chair was a visit to the trading floor to signal a commitment to investment banking.
Barclays has a strong North American presence as a result of the takeover of Lehman in New York.
There is plenty of tidying up to consider. The bank has a powerful franchise, ABSA, in South Africa which is likely to be rebranded Barclays. Its operations in Europe, notably the remaining business in Spain, could yet be found surplus to requirements.
What I would expect is that McFarlane will simplify the byzantine 375 management committees and give loving care and attention to the investment bank. He needs to squeeze out the buccaneering culture, the legacy of Diamond, bloodstock owner Rich Ricci and pals.
Squeezing the pips
Threats by HSBC, Standard Chartered et al to up sticks and head to foreign parts were listened to by the Chancellor. But proposed changes are not welcomed by the industry. To make sure the Exchequer doesn’t lose out, a new 8pc corporation tax surcharge will be applied to all 150 London banks, including the previously excluded challenger banks.
There was a predictable roar of protest from the British Bankers’ Association and share prices of challenger banks tanked.
How very unfortunate for new Spanish friends Sabadell that has just taken over TSB. A week after the Treasury suckered the new arrivals with a fulsome welcome, it has delivered a real punch.
Among Tory aspirations are to reduce the number of quangos and to simplify Britain’s taxes. You wouldn’t know it. An assortment of new bodies, including a Centre for Agricultural Informatics and Sustainability Metrics, Transport for the North as a statutory body and the empowerment of the Office for Tax Simplification add to the size of government.
As for simpler taxes, there are at least 40 changes, many so convoluted they border on incomprehensible.
I fear the accountants’ bible Tolley’s Tax Guide, that ran to 16,220 pages at last count, is to be fattened up again.