New Barclays much like the old Barclays, a hard pill to swallow for GlaxoSmithKline and Wilson's next Legal & General move

Mark Kleinman
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John McFarlane is a man fond of bold actions and even bolder words. The Barclays chairman confidently predicted last July that the bank’s shares – then worth 260p – would double within three years.

After this week, though, even returning to the anaemic level of last summer looks a lofty ambition.

“Investors” and “long-suffering” have become inseparable words at a bank which argued during the financial crisis that retaining autonomy over capital distributions was reason enough to remain free from the suffocating ownership of British taxpayers.

It hasn’t turned out that way. The savage dividend cut unveiled on Tuesday – which will see the payout slashed from 6.5p to 3p in 2016 and 2017 – is the latest body-blow to shareholders whose faith in Barclays has been sorely tested in recent times.

Cutting the dividend will save Barclays about £500m in each of the next two years.

Jes Staley, the bank’s new chief executive, says the capital is necessary to redeploy on accelerating the restructuring initiated by his predecessor, Antony Jenkins.

Interviewing him on Tuesday, I challenged Staley to preserve investors’ faith and reduce the next two years’ bonus pools instead. He responded with the conventional bankers’ retort of needing to pay staff “competitively”.

Yet by 2018 it will have been six years since Barclays raised its full-year dividend, and Staley is already committing the mistake of assuming that support for his arrival will be accompanied by an unending patience for an elusive step-change in performance.

Instead, this week’s news has left many institutions feeling cheated, and convinced that Staley’s approach to shareholder rewards will be identical to those who preceded him.

McFarlane’s share price forecast reflected his enormous self-belief, an attitude which has proved problematic before.

Last autumn, he was left skating on perilously thin ice with regulators over Barclays’ ringfencing plans – hardly a novel state for the bank’s directors.

With his exit likely by 2018, McFarlane may well look back at this week as the moment that hubris turned irrevocably to nemesis.


Recruiting the chief executive of a FTSE 30 company is difficult enough at the best of times, so spare a thought for Sir Philip Hampton, newly anointed as British boardrooms’ diversity champion.

It emerged this week that Sir Philip had kicked off a formal search for a successor to Sir Andrew Witty, pharma giant GlaxoSmithKline’s long-standing boss.

The lengthy process has been well signposted amid a growing clamour from shareholders – led by Neil Woodford of Woodford Investment Management – to inject some fresh impetus into a company which could be worth less than the sum of its parts.

Woodford and others believe that GSK, which has been afflicted by the patent cliffs and dearth of new blockbuster drugs hurting the wider industry, would be better off carved up into its component parts.

An external appointment therefore looks most likely, but of GSK’s current executives, Emma Walmsley, the highly regarded head of its consumer healthcare operations, is the most likely to present Sir Philip with a headache.

Appoint Walmsley, and he risks being accused of tokenism; bypass her, and he risks being accused of failing to practise what he preaches.

If he thought the politics of RBS were tricky, the gender politics he now has to navigate might make rescuing the world’s biggest bank seem anodyne by comparison.


On the subject of board appointments, I hear Legal & General is on the verge of announcing Julia Wilson as its new senior independent director.

The appointment will be notable because it will rule Wilson out of the race to succeed John Stewart as L&G’s next chairman.

Whoever does take over from Stewart will eventually have the task of replacing another Wilson – Nigel, the company’s irrepressible chief executive. I don’t envy them that assignment.

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