Barclays has appointed its head of retail and business banking Antony Jenkins as its new chief executive, replacing Bob Diamond who was forced out by the Libor rate fixing scandal in July. Here is what analysts made of the appointment.
Mike Trippitt at Oriel Securities
We see Mr Jenkins as a highly capable executive who will take a fresh look at the allocation of capital across the group, particularly in a post ring-fenced world and the group's remuneration policy, particularly within investment banking.
Mr Jenkins' appointment may refuel the Barclays demerger story. We estimate the investment bank would require an additional £11bn of equity to make it Basel 3 compliant today, requiring a rights issue. We therefore see reallocation of capital and gradual deleveraging as the more likely strategy for the investment bank.
Whilst the shares do appear cheap, they reflect further regulatory risk and the longer term impact of ring-fencing. The prospect of an improved investment banking quarter could lead to some outperformance - more likely a first quarter 2013 event.
Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers
The bank's fight to restore its reputation continues. The chairman-elect has clearly given his stamp of approval, with the group appearing to signal a move back to its retail banking roots. The former head of Barclaycard appears untarnished by the Libor scandal, and given his group experience, provides something of a running start.
On the downside, and allowing for both the challenges ahead and the combined political and media scrutiny, questions as to whether Barclays has appointed the best candidate are likely to remain. The new appointee also comes with a lack of investment banking experience – an important current group profit generator – whilst time at the bank during its mis-selling of Payment Protection Insurance (PPI) also needs to be remembered.
In all, news that the Serious Fraud Office has joined the Financial Services Authority in its fund raising investigation may be more important in taking the share price lower in early trading. Developments in the eurozone also remain highly significant, while the fiscal cliff in the US continues to loom ever larger. For now, despite a wealth of uncertainties, with the valuation seen as attractive and the group's exposure to investment banking providing greater exposure to any economic recovery than rivals, analyst opinion continues to denote a buy.
David Buik at Cantor Index
He had been many people's idea of CEO to keep continuity going. He ticked all the conservative boxes; he was not flash – a marathon runner and a family man.
I am still amazed that Sir David Walker, [the chairman-elect] arrived at that decision with his colleagues. Though I am personally a great fan of Barclays, to restore the optics, credibility and trust of shareholders and its customers, I thought it was essential that an external candidate was appointed. I am sure that Barclays' staff will be delighted and they will feel that they can all get behind him. This will be essential as the cumulo-nimbus clouds of concern gather over the entire banking sector. What will be important is the next tranche of management to be appointed. That may help to narrow the optics and credibility gap.
Analysts at Investec
The bank has also been in the news for possible irregularities regarding fee payments in association with its Middle Eastern capital raising efforts in 2008. Given these investigations an external candidate may have been better for Barclays, though with a change of both chairman and CEO the continuity of an internal candidate has some benefits too.
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