Abigail Hofman: Why Jenkins is wrong for Barclays


Abigail Hofman
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As a Brit and career retail banker with a long and successful history at Barclays, Antony Jenkins may be seen in some quarters as the perfect successor to Bob Diamond as chief executive. For one market commentator in particular however, Jenkins is an unknown quantity whose suitability is questionable.

Earlier this year, in my May column, I vigorously attacked Barclays after its chief executive, Bob Diamond, received over £20 million as his 2011 compensation. I was particularly incensed about a tax equalization pay-out of £5.7 million meant to compensate Diamond for exiting the US tax system when he returned to the UK to take up the chief executive role. "Barclays’ chairman, the garden-loving Marcus Agius, is compromised..." I thundered. "The bank’s remuneration committee should all be fired, starting with its head, Alison Carnwath.... And as for Diamond, he must steel himself and appoint a few individuals to his inner circle who know how to say no."

Less than four months later, everyone named in that paragraph has gone and I expect there will be further board resignations. After all the board is meant to police the executives and the Barclays board seems to have done a spectacularly poor job of this. It comes down to that ‘A’ word again – accountability.

The new guard at Barclays includes veteran regulator Sir David Walker – an unusual choice for chairman given that he is 72 years old. So effectively Walker will have to start interviewing for his replacement as soon as he has furnished his capacious corner office. And in late August, the bank named Antony Jenkins, the former head of retail and business banking, as its new chief executive.

Jenkins, a long-standing Barclays employee, is an unknown quantity. Before his appointment as chief executive, he ran Barclays’ retail and business banking divisions for three years. From 2006 to 2009, he headed the Barclaycard operation. In the second quarter of 2012, Jenkins’s division accounted for some 48% of group profits and his area’s profits were up 10% year on year.

There are several things I don’t like about Jenkins’s appointment. First, as the Libor scandal and the regulatory probes into the 2008 Qatari fund-raising show, Barclays is in desperate need of cultural change. Is Jenkins really the ideal candidate to achieve this?

In the past, he was a peer of Rich Ricci, the head of the investment bank. Will Jenkins now be able to persuade Ricci to introduce substantive change to the investment banking area? Indeed, is he prepared to replace Ricci?

Ricci is a genial guy but he is the wrong person to lead the investment bank into the future. After all, Ricci was a key lieutenant of Diamond. He was appointed COO of Barclays Capital in 2005 and then in 2009 he was elevated to co-chief executive of the division. Ricci has been intimately involved in all the decisions that brought BarCap to where it is today and indeed in creating and implementing the unpalatable BarCap culture.

This was the summer when many of the chickens that the Abigail with attitude column has been husbanding came home to roost
This was the summer when many of the chickens that the Abigail with attitude column has been husbanding came home to roost
Another thing I don’t like about Jenkins’s appointment is his pay package. This could be worth as much as £8.6 million (including base salary, annual bonus and long-term incentive plan contribution). Indeed Jenkins’s remuneration is little different from Diamond’s core package for 2011. This is despite the fact that Jenkins immediately lowered his predecessor’s return on equity target. It seems to me that Jenkins’s compensation is more of the same – and not in a good way.

Walker – who was responsible in 2009 for an independent review of corporate governance in the UK banking industry– has disappointed me. I very much hope that long-suffering shareholders are not going to be treated to a repeat of the cosy Diamond/Agius show, which provided ample rewards for executives and paltry returns for shareholders.

The final thing I didn’t like was the press release accompanying Jenkins’s appointment. It was full of jargon and thoroughly irritating. Assuming that Jenkins actually read the announcement before it was released, approval of the document shows poor judgement. If Jenkins didn’t read it, he shows little attention to detail and that is not ideal either.

A key part of the release states: "We have an obligation to all of those stakeholders – customers, clients, shareholders, colleagues and broader society – and a unique opportunity to restore Barclays’ reputation by making it the ‘go-to’ bank in all of our chosen markets. That journey will take time..."

I would make a few points on this verbose prose. First, customers and clients are synonymous. So why engage in pointless repetition that merely serves to reveal that you are sloppy with language? Secondly, this is not a "unique opportunity" for Barclays to restore its reputation. There have been many other occasions when the bank was in a mess. Remember when it lost hundreds of millions of pounds in Russia in 1998 and the chief executive, Martin Taylor, resigned? Remember when the share price fell to 49 pence in early 2009?

The words "the go-to bank" are teeth-grindingly awful jargon. And "journey" has no place in business announcements unless they are issued by a transport company. Sometimes I despair!