Barclays Plc (BARC), Britain’s second-largest bank, is under pressure to find an external candidate to distance the bank from Chief Executive Officer Robert Diamond, who quit after the lender was fined for rigging Libor rates.
Diamond, 60, quit today amid political pressure to go after the lender was fined a record 290 million pounds ($455 million) for attempting to manipulate the London interbank offered rate, the benchmark for about $360 trillion of securities ranging from mortgages to student loans.
“It’s of paramount importance that an external appointment is made in order to clean up the image of the company,” Gary Greenwood, a banking analyst at Shore Capital, said. “The question now will be who will come in to replace Mr Diamond and whether further senior heads will roll?”
Barclays may struggle to find an outsider quickly, while insiders such as securities unit head Rich Ricci, may not be sufficiently independent to appease investors.
“It’s going to be very difficult to find a candidate that ticks the boxes,” said Stephane Rambosson, managing partner at executive search firm Veni Partners in London. “There are very few internal candidates and if you look externally, what is Barclays offering? A huge amount of responsibility and scrutiny over pay at a bank with no clear contingency plan.”
Officials at Barclays declined to comment on successors for Diamond and Agius. The shares declined 0.8 percent to 167.05 pence in London trading, giving the company a market value of about 20 billion pounds. The stock is this year’s worst performer in the six-member FTSE 350 banks index.
The lack of a clear succession plan is a “board failure,” Simon Johnson, a professor at the Massachusetts Institute of Technology’s Sloan School of Management, said in a telephone interview. “The board’s responsibility is to hire and fire the CEO if anything happens, and to have a succession plan. It may speak to the broader cultural problems within Barclays.”
Marcus Agius, 65, said he would step down as Barclays chairman yesterday. Today, the bank said he would remain to oversee the search for Diamond’s successor before leaving.
“Companies should have a clear succession planning strategy for all senior leaders,” said Neil Owen, Global Practice Director at Robert Half Financial Services, a London-based recruitment firm. “Failing to do so results in the dilemma that Barclays faces.”
Ricci, 48, who runs the investment bank, would be an unlikely potential successors, said Simon Willis, an analyst at Daniel Stewart Securities Plc (DAN) in London. He could be seen to be too close to the unit involved, he said.
Jerry Del Missier, 50, who was named chief operating officer last month and who jointly ran the investment bank until then, also stepped down today.
Bill Winters, 50, the former co-chief executive officer of JPMorgan Chase & Co.’s investment bank and a member of the government-sponsored Independent Commission on Banking would be ideal for the CEO position, said Cormac Leech, an analyst at Liberum Capital Ltd. in London. Winters, who has started an asset management firm, declined to comment.
David Roberts, Lloyds Banking Group Plc deputy chairman and a former Barclays executive, would be a “safe pair of hands and understands the businesses,” said Edward Firth, a banking analyst at Macquarie Group Ltd. in London.
Royal Bank of Scotland Group Plc CEO Stephen Hester “is highly regarded and if offered the Barclays CEO role, may well take it since it would offer a greater chance of bonus potential than state-run RBS,” analysts including Andrew Lim at Espirito Santo Investment Bank wrote in a note to investors.
Jenkins’s “lack of investment banking expertise may be overlooked by investors given that such experience is not exactly a positive right now,” Lim said.
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