(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)
Antony Jenkins needs to roll up his sleeves. Barclays’ new chief executive has many of the qualities the UK bank needs following the controversial tenure of Bob Diamond. But Jenkins will need to over-deliver for investors to forget two key drawbacks.
Jenkins ticks a reassuring array of boxes. Since 2009 he has run Barclays’ global retail operations. Given that the bank has been involved in mis-selling scandals surrounding payment protection insurance and interest rate swaps, this is not an unconditional thumbs-up. But it means Barclays’ public face now has a background in the more accessible business of selling mortgages and current accounts, not high-octane investment banking. And he is British, appropriate in an era when banks are retreating to their core markets.
But Jenkins’ CV also presents two problems. First, he has limited investment banking experience. Since Diamond masterminded the rise of Barclays Capital in the late 1990s, the investment bank’s traders and salespeople have had a very vocal champion at or near the top of the group. With Jenkins at the helm, Barclays’ commitment to the business may be called into question. Given that BarCap contributed 54 percent of group pre-tax profit in the first half of 2012 that’s an issue, albeit one partially offset by the fact that David Walker, Barclays’ new chairman, has more investment banking experience.
Jenkins’ other problem is that he is an insider: he has been on Barclays’ executive committee since 2009. Granted, his elevation came after the wrongdoing related to the bank’s biggest recent scandals: a 290 million pound fine for rigging interest rates, and a regulatory probe into payments connected with its Qatari capital raising in 2008 that is now attracting scrutiny from the UK’s Serious Fraud Office. But a genuine outsider would find it easier to rise above the continuing fallout.
Jenkins therefore needs to quickly set out his stall. A review of all Barclays’ business units, where each will have to show that returns exceed cost of equity and justify staff pay, is a good first step. But he will have to carefully balance the need for a retrenchment of BarCap without sparking an exodus. Meanwhile, Jenkins will have to not only comply with lawyer Anthony Salz’s review into Barclays’ culture, but champion its recommendations. Tough battles lie ahead.