Barclays Plc (BARC), the British bank fined a record for interest-rate manipulation named former Bank of England executive director David Walker as chairman, its first move to replace leaders ousted in wake of the Libor scandal.
He will start on Nov. 1 and succeed Marcus Agius, the lender said yesterday in a statement. Walker, 72, is a senior adviser to Morgan Stanley and oversaw a review of the banking industry for former Prime Minister Gordon Brown.
Walker said his first task will be to find a replacement for Chief Executive Officer Robert Diamond, who resigned last month with Agius, 66, after the bank was fined 290 million pounds ($453 million) in June by U.S. and U.K. regulators for attempting to rig the London interbank offered rate.
“He’s very well-connected,” said Christopher Wheeler, a banking analyst at Mediobanca SpA (MB) in London. “But it feels you are going back a long way in your address book to find someone. He’s had a great career. He’s a bit of a veteran, and this is going to be a 24/7 job.”
Walker’s appointment may boost the chances of Antony Jenkins, Barclays’s head of consumer banking, being named CEO, Wheeler said. Jenkins’s background as an insider with consumer banking experience would complement Walker’s investment-banking career outside Barclays, he said.
A graduate of Queen’s College, Cambridge, Walker began his career as a civil servant in the Treasury before moving to the Bank of England in 1977.
He was chairman of NatWest Financial Markets Group Inc. from 1986 to 1992 before becoming deputy chairman of Lloyds Bank Plc. He also served as chairman of the Securities and Investment Board, a predecessor of the Financial Services Authority, between 1988 and 1992. He joined Morgan Stanley (MS) in 1995.
In 2007, he developed a set of disclosure guidelines for private-equity firms working in Britain as the industry sought to fend off increased government regulation as buyouts boomed.
Two years later, he wrote a government-commissioned report into corporate governance that recommended banks delay bonus payments, increase the policing powers of risk committees and bolster the responsibilities of chairmen to avert a repeat of the financial crisis.
“Leading a review into corporate governance will tick a big box, and he’s an investment banker, so has that knowledge and he’s ex-Bank of England, so they’ll be happy with him,” said Gary Greenwood, an analyst at Shore Capital Group Ltd. in Liverpool with a hold rating on the shares. “Given the governance and Bank of England angle it’s as sensible an appointment as you’re going to get.”
Walker will receive 750,000 pounds a year in salary, including 100,000 pounds in Barclays shares, the same as his predecessor, for a four-day week at the bank. He’ll get no bonus or pension, according to the London-based lender’s statement.
Barclays climbed 1.2 percent to 181.15 pence as of 8:05 a.m. in London trading. The shares are still 6 percent below their June 26 close, the day before the record Libor fines were disclosed. The bank is the third-worst performer this year in the six-company FTSE 350 Banks Index, having gained 1.6 percent.
He takes over as regulators in the U.S. and Europe probe more than a dozen banks worldwide over allegations they manipulated Libor, the benchmark interest rate for more than $360 trillion of securities. Investigators are examining whether traders colluded to rig the rate for profit and whether banks hid their borrowing costs to appear healthier than they were.
Criticism from lawmakers and the Bank of England forced the resignation of Agius, Diamond and former Chief Operating Officer Jerry Del Missier. Agius has been leading the bank in the interim and the search for his own successor.
Agius apologized last month for the lender’s role in the Libor scandal as he reported a bigger-than-estimated 13 percent increase in first-half pretax profit excluding one-time items to 4.23 billion pounds. The bank also opened a review into its business practices presided over by Anthony Salz, executive vice chairman at Rothschild. He will review past practices, publish a report to the public and draw up a code of conduct for employees, Barclays said.
The lender is still being investigated over the disclosure of fees related to the bank’s fundraising in 2008. Four employees, including Finance Director Chris Lucas, are being probed, the bank said last month. The investigation is focused on whether the bank adequately disclosed fees it agreed to pay to the Qatar Investment Authority as it sought to raise money from investors including the sovereign-wealth fund, a person with knowledge of the situation said on July 27.