Barclays (BARC)


Management changes at Barclays a step in the right direction

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Finance director Chris Lucas and group general counsel Mark Harding have decided to retire from Barclays (BARC).

"[Lucas] and [Harding] both expressed to me late last year that they were considering stepping down from their roles at Barclays," explained chief executive Antony Jenkins. "The rationale which each shared with me was consistent and, typically, grounded in wanting to do what is best for the bank. Their decision to retire was theirs alone."

Both Lucas and Harding have agreed to remain in their roles until their successors have been appointed and an appropriate handover completed.

The search for these appointments was now underway. "Given the seniority of the roles, and the importance of securing the right candidates, we expect that process to take a considerable time to complete," the bank cautioned.

Interactive Investor view

The past year has seen the bank encounter one obstacle after another, from the Libor scandal and resignation of ex-chief executive bob Diamond, to Financial Services Authority and Serious Fraud Office investigations into Barclays, relating to fees paid to sovereign wealth fund Qatari Holdings during 2008's emergency rights issues.

But Barclays has already started making pathways - The departures of Lucas and Harding means that Jenkins can now start to put a brand new management team in place.

In January, it confirmed that it had formally initiated consultation ahead of possible redundancy with all 9,000 of its UK investment banking staff.

And, over the next few days, the bank is to unveil the outcome of its strategic review; the execution of which is expected to take place over the next five to ten years.

Analyst view

"Since early January, a wave of sellside earnings upgrades has been driven by, inter alia, a rebasing of Barcap expectations. Consensus for costs in 2014 has now fallen by £0.3 billion to £7.2 billion, i.e. flat against 2012," noted Investec analyst Ian Gordon. "Again, given an expectation of a reduction in both (1) overall headcount and (2) cost per head, we regard this as unrealistic and expect Barclays to deliver a much more shareholder-friendly, (and politically expedient), outturn."

He added that he did not expect Barclays to exit any material investment banking activity, stating that there would "undoubtedly" be more narrowly-defined soundbites for political consumption.

He cautioned: "Despite an assumption that Barcap will continue to enjoy ongoing market share gains as others retrench and/or exit, we do expect a modest adverse revenue impact in 2013 (as much driven by industry evolution as headcount rationalisation). Indeed, our 2014 Barcap revenue forecasts are down 1% [versus] 2012. Consensus is more optimistic, and such optimism supports a recent crop of quite frothy target price inflation."

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