New chairman John McFarlane will run the bank until a replacement is found.
Antony Jenkins has been ousted as the boss of Barclays bank three years after he was promoted to the job in the wake of the Libor scandal.
The bank said he was being temporarily replaced by the new chairman, John McFarlane – who has only been in post since April - to clear the way for new leadership to accelerate changes at the business.
Behind Jenkins’s shock departure is a long-running boardroom row over the future of Barclays’ investment banking side, the business that was built up by his predecessor Bob Diamond.
The group’s non-executive directors took behind-the-scenes steps to remove their chief executive after a series of presentations to the board last month in which the current strategy was discussed.
McFarlane said there had been “rumblings” among the non-executives for some time and they had approached him with their concerns. He indicated more branches would close and jobs would go.
“Barclays is not efficient,” he said, pointing out that it has 375 management comittees. The bank needed “energy and speed of decision-making,” he said. Barclays’ sponsorship of the Premier League will end next year.
Sandy Chen, analyst at Cenkos, said: “There’s a new sheriff in town, and he’s got the board’s (and, we assume, the regulators’) backing to make sweeping changes. We have long advocated an aggressive pruning of the investment bank; the time for this, it appears, is now.
Barclays shares rose 3% to 260p after the news, bolstered by McFarlane’s assertion that the bank would not need to tap shareholders for cash.
Jenkins’ departure will be cushioned by a year’s salary and other benefits, which will run to at least £2.5m before any bonuses are released to him from prior years as he is being paid until next July.
The timing of the announcement evokes memories of 2013 when the bank announced it was paying its top bankers £39.5m in bonuses – including the since departed Rich Ricci – on the day of the budget. The chancellor George Osborne is due to deliver his first budget in a Conservative government on Wednesday.
Jenkins had been attempting to restore the bank’s reputation in the wake of the Libor rate-rigging scandal. He was lambasted for explaining that bonuses had to be increased in 2013 when profits had fallen to avoid a “death spiral” of staff leaving.
The change takes place from 17 July when McFarlane will leave the board of First Group. His promotion to the top job mirrors the role he took on at insurer Avivia during the 2012 shareholder spring when the insurer’s boss was also ousted.
McFarlane said: “Whilst it is unfortunate that I have had little time to work with Antony, I respect and endorse the position of the board in deciding that a change in leadership is required at this time. I would add my personal thanks for everything that Antony has done for us. He can be proud of his heritage, especially his excellent work on culture and values that we will continue. I wish him well.
“Arriving at Barclays with a fresh perspective, it is evident that we have a standout brand with first-class retail, commercial and investment banking businesses. Nevertheless, we are leaving value on the table and a new approach is required. As a group, if we aspire to bring shareholder returns forward, we need to be much more focused on what is attractive, what we are good at, and where we are good at it.”
Jenkins’ departure will fuel speculation that Barclays is poised to further retrench from investment banking. Last year he said 19,000 jobs would go in attempt to bolster returns in the business that once generated a third of the bank’s profits.
Jenkins said: “In the summer of 2012, I became group chief executive at a particularly difficult time for Barclays. It is easy to forget just how bad things were three years ago both for our industry and even more so for us. I am very proud of the significant progress we have made since then.”
Sir Mike Rake, the most senior independent director at Barclays, said: “I reflected long and hard on the issue of group leadership and discussed this with each of the non-executive directors. Notwithstanding Antony’s significant achievements, it became clear to all of us that a new set of skills were required for the period ahead. This does not take away from our appreciation of Antony’s contribution at a critical time for the company.”
Jenkins was promoted from running the retail bank when Diamond was forced out three years ago just days after the bank was fined £290m for rigging Libor. The new chief executive repeatedly said he wanted to make Barclays the “go to” bank. In an attempt to show he was trying to turn around the culture, he had also installed five huge blocks inside the cavernous entrance hall of the bank in Canary Wharf, each one emblazoned with his buzzwords of “respect, integrity, service, excellence and stewardship”.
A full-time successor will be sought externally and internally. Immediate speculation will focus on the finance director Tushar Morzaria and Jonathan Moulds, who was recently hired to implement the “ringfencing” rules that UK banks must comply with to separate their high street banks from their investment banking businesses.