london 08 30, 2012, 18:30 IST
Barclays named retail banker Antony Jenkins as chief executive on Thursday, signalling a shift of emphasis from investment banking after the interest rate-setting scandal that brought down his American predecessor Bob Diamond.
Regulators had criticised Britain's fourth biggest bank by market value for an aggressive risk-taking culture and the big question for the soft-spoken Jenkins is whether he will pare back the investment bank that the colourful Diamond had built.
Jenkins said Barclays had made mistakes and had to change.
"Getting there will require nothing short of the transformation of how we operate the business," he said.
He told Reuters: "It would be wrong to ignore some of the things that have happened in the past. That does require us to modify the culture."
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Jenkins inherits a daunting in-tray. He was appointed hours after the bank said fraud prosecutors had launched a criminal probe into dealings with Qatar in 2008. That comes just two months after Barclays was fined over $450 for manipulating Libor interest rates, prompting Diamond's resignation.
Jenkins, 51, started as a graduate trainee at Barclays in 1983. After spells elsewhere, he returned six years ago to turn around its credit card business before taking on all its retail banking.
INVESTMENT BANK QUESTION
He had been seen as the leading internal candidate to follow Diamond, although some investors had questioned his lack of investment banking experience and would have preferred an external hire to mark a bigger change.
The investment bank has been at the heart of the firm's recent troubles, but it delivered 54 percent of the group's underlying profit in the first half of 2012.
Barclays would only be following other global banks in scaling back investment banking at a time of tougher economic conditions and additional regulation, but financial analysts questioned how far Jenkins would do so.
Changes would be "incremental rather than revolutionary" said Jason Napier, analyst at Deutsche Bank.
"We expect the bank to stick to its strategy of seeking to operate world leading retail and investment banking operations," he said.
Barclays shares traded down nearly 0.7 percent at 1245 GMT compared to a 0.6 percent fall in the European banking index.
In manner, there is little doubt Jenkins will mark a contrast with the flashier style of Diamond, who relished being photographed handing out the trophies for England's top soccer league, which the bank sponsors.
Jenkins dislikes football. He prefers tennis and running and likes to keep a low profile.
The Oxford University graduate, who grew up in Stoke-on-Trent, left Barclays in 1989 and then moved up the ranks during 16 years at U.S. rival Citi in London and New York before returning.
"I feel ready and excited for this challenge," he told Reuters after taking over as chief executive of a bank whose origins date to 1690.
"He's a very capable guy," Oriel Securities analyst Mike Trippitt said. "I think the fact that he's come up the ranks in the retail and commercial world means he'll take a very fresh view of the investment bank."
STABILITY GOAL
Jenkins told Reuters his three priorities were to stabilise the bank, deliver sustainable returns for investors, and to set out a long-term plan to make Barclays the "go to" bank for customers.
"First is a period of stabilisation," he said, promising to work with investors, politicians and regulators, who often bristled at Diamond's brash approach.
His profitability target also marks a shift from his predecessor. Jenkins said he would aim to deliver return on equity (RoE) above cost of capital of about 11.5 percent, rather than use the absolute RoE target of 13 percent set by Diamond.
RoE is a key measure of profitability and many banks are struggling to match their cost of capital.
Diamond warned in February that Barclays may not reach his 13 percent target by 2013 as he had hoped. The bank's adjusted RoE was 9.9 percent in the first half of this year.
The change in targets was another sign of the shift in culture Jenkins aims to bring about, but some financial analysts questioned whether an insider could bring a real revamp.
"At least he comes from the side of the bank that was blameless in the recent troubles," said Jane Coffey, head of equities at Royal London Asset Management.
Technology and gadget enthusiast Jenkins beat off competition from external candidates for the role.
Outgoing Chairman Marcus Agius, who also resigned over the Libor scandal, said in a memo to staff that after interviewing short-listed candidates the board's decision to appoint Jenkins was unanimous.
Industry veteran David Walker will replace Agius in November - an appointment that could appease some worried about the future of the investment bank And the need for external leaders to impose change.
Barclays said Jenkins would receive an annual salary of 1.1 million pounds, plus up to 2.75 million pounds in annual incentive awards plus long-term incentive awards of up to 400 percent of salary.