Barclays PLC Fires CEO Antony Jenkins To Speed Up Its Turnaround

Barclays PLC (LON: BARC) has announced a management shake up to speed up reforms.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

In a surprising move, Barclays (LSE: BARC) (NYSE: BCS.US) announced this morning that it has fired chief executive Antony Jenkins, after only three years at the helm.

It turns out that Jenkins had lost the confidence of the group’s non-executive directors. The decision to oust him was made on the sidelines of an annual off-site board meeting two weeks ago. 

Jenkins is being replaced by John McFarlane on an interim basis. 

Accelerate the pace of execution

According to Barclays, today’s leadership change does not signal any major strategy change. Mr McFarlane’s appointment is simply designed to “accelerate the pace of execution“. Indeed, John McFarlane has a reputation as a ruthless turnaround specialist.

Commenting on the management overhaul, Sir Michael Rake, Barclays’ deputy chairman said:

“…it became clear to all of us that a new set of skills were required for the period ahead.”

In another statement Barclays said:

“…new leadership is required to accelerate the pace of execution…”

Analysts are already starting to speculate that an accelerated cost-cutting programme is now on the cards for Barclays. Further job losses are likely and non-core divisions, like Barclays’ investment bank and Western European retail businesses, could also be on the chopping block. 

Mr Jenkins has struggled to get to grips with Barclays’ investment bank — which has become the group’s worst performing division — during his short term as the bank’s CEO. 

Good news 

Barclays’ shares have jumped by 3.2% in early trade this morning, so it seems as if the market supports the bank’s decision to kick Mr Jenkins out.

And there are plenty of reasons to be upbeat. Indeed, while Mr Jenkins recently declared that the bank was in its best shape since the financial crisis, there’s still plenty of work for the group to do before it returns to growth. 

For example, there’s still a considerable amount of drag on Barclays’ earnings from the group’s non-core business. Unnecessary bureaucracy is also eating into returns according to analysts. 

Tackling key issues

It is believed that Mr McFarlane will now look to tackle these issues head on. An enlarged cost-cutting programme is on the cards and analysts expect the bank to announce a further restructuring of its investment bank. 

Barclays used to generate the majority of its profits from its investment bank. But now, the division has become weighed down by regulation and slower market activity.

The investment bank’s return on equity — a key measure of profitability — dropped to only 2.9% last year. In comparison, Barclays’ personal and corporate banking arm reported a return on equity of 11.9% for full-year 2014. 

Moreover, Barclays’ growth is being held back by the group’s “bad bank”. Simply put, a bad bank is the equivalent of a financial dustbin and contains all the risky loans and toxic financial products that Barclays wants to dispose of. 

Barclays is in the process of winding down its bad bank, but the process is taking time. With a new CEO, it is believed that the process of selling off toxic assets will be accelerated. 

The bottom line

Overall, Barclays’ decision to fire Antony Jenkins was made in an attempt to speed up the bank’s restructuring and recovery.

Only time will tell if this was the right decision. However, the market’s initial reaction suggests that investors fully support the move.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has recommended Barclays. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Illustration of flames over a black background
Investing Articles

2 red-hot UK growth stocks to consider buying in April

These two growth stocks are performing well, but can they continue to deliver for investors through 2024 and beyond?

Read more »

Charticle

Is JD Sports Fashion one of the FTSE 100’s best value stocks? Here’s what the charts say!

The JD Sports Fashion share price remains a wild ride during the first quarter. Could it be one of the…

Read more »

Investing Articles

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »