Investors will be hoping the retirement of Barclays’ (BARC) chairman John Macfarlane in May 2019 and his replacement by Rothschild veteran Nigel Higgins can mark a fresh start for the business. The shares are marked 1% higher to 177p in response to the news.
Admittedly there has been operational progress under Macfarlane who led the December 2015 appointment of current chief executive Jes Staley months after his own.
Profitability has improved, and the balance sheet is in better shape, but Macfarlane set a bullish target of doubling the share price within three years of his June 2015 appointment - the chart below shows how that has gone?
The whole situation is complicated by the presence on the shareholder register of activist investor Edward Bramson through his Sherborne vehicle. Bramson is pushing for changes.
AJ Bell investment director Russ Mould says: ‘The bank is under severe scrutiny over its corporate strategy with Edward Bramson’s activist investment vehicle Sherborne Investors taking a large stake earlier this year. Reportedly Sherborne had no role in the appointment of Rothschild alumni Higgins.
‘Sherborne, and by extension Bramson, want Barclays to jettison parts of its investment banking business. Given a lot of Higgins’ experience is in the investment banking arena, the activists may not be particularly encouraged by the appointment. Chief executive Jes Staley has so far proved resistant to a shift in direction.’
Mould adds that Higgins might avoid making big promises given Macfarlane’s experience. In his view achieving the 20% return on equity target by 2020 would represent a ‘good start’.
Shore Capital analyst Gary Greenwood comments: ‘Whether Mr Bramson, who likes to have influence over the board of companies he invests in, supports the appointment of Mr Higgins remains to be seen.
‘Either way, we hope the new chairman can bring a fresh perspective and impetus to the group and its share price, perhaps succeeding to deliver what his predecessor has so far failed to achieve.’
