Barclays shares get lift from new chairman appointment

Barclays shares rose yesterday after the bank named City grandee Sir David Walker as its new chairman, moving quickly to fill a void and picking a corporate governance expert to lead a recovery from the UK bank’s interest rate rigging scandal.

Sir David, 72, is a former Bank of England and Treasury official who wrote one of the most significant governance manuals for UK banks and has investment banking experience from 17 years at Morgan Stanley.

“We hope it marks the beginning of a new chapter – a chapter of change – for Barclays. We are confident that Sir David is the right man for the job,” said Guy Jubb, global Head of Governance & Stewardship at Standard Life Investments, a top 10 shareholder.

“This will be good for Barclays and good for the City of London,” Mr Jubb added.

Sir David has been offered a three-year term to spearhead the bank’s recovery efforts, with the tasks of cutting pay, improving culture and picking a new CEO bold enough to change strategy at the top of his agenda, analysts said.

“This appointment is another positive step in the right direction for the company as it continues its fight back from the aftermath of the Libor scandal,” said Gary Greenwood at Shore Capital.

Barclays said late on Thursday that Sir David would become a director at the start of September and take the chairman’s seat two months later.

He replaces Marcus Agius, who quit following Barclays’ record $453 million fine for manipulating Libor lending rates in a scandal that forced the resignation of Bob Diamond as chief executive and exposed deep cracks in the bank’s relations with US regulators.

While welcoming an end to uncertainty over Barclays’ leadership, investors hoped Sir David would have the stamina to steer the bank through one of the most challenging periods in its history.

“What they have to do for the next year or 18 months is to rebuild relationships ... he will help to find a CEO who is good with the Americans,” one top 40 shareholder said.

Sir David said he would be “fully engaged” in the hunt for a new CEO, picking up the baton from Mr Agius who has told staff he was encouraged by the quality of candidates seen so far.

Another key issue for new bosses is the future of the investment bank, which many analysts expect to be shrunk.

“His strong regulatory background and preference towards longer deferral of bonuses will be a positive in terms of lowering the cost of equity and improving returns for shareholders,” said Andrew Lim, analyst at Espirito Santo.

But he added that Sir David may “rein in Barclays’ more ambitious investment banking operations”, which could negatively affect returns in a business that is doing well against rivals.