CONSIDERING the glee with which investors reacted to Antony Jenkins’ plans yesterday, you’d been forgiven for thinking his cost cuts and clean-up had come out of the blue.
But these changes were widely trailed – almost down to the letter – so why was an extra 26p added to the bank’s share price yesterday, on top of the 36 per cent that the stock has climbed since he joined last August?
The answer seems to lie in Jenkins’ ability to keep both shareholders and banker bashers happy at the same time. These cost savings aren’t only headline grabbing – they’re absolutely necessary if the new boss is going to deliver the return on equity of 11.5 per cent that he’s promised by 2015.
It’s an ambitious figure that just wouldn’t materialise if Jenkins relied on increasing revenues, particularly not with a massive £2.7bn in restructuring costs lurking on the horizon.
Investors’ and analysts’ positive reaction proves that the mess Jenkins was left with when he took over from Bob Diamond last summer may actually have been a blessing in disguise. With fines piling up and executives falling on their swords all over the place, the retail man had a free pass to sweep away the bad eggs – racking up cost cuts that could have otherwise been met with a little more scepticism.
It’s left him sitting pretty at the helm of the UK’s top performing bank throughout the second half of 2012 and into the New Year – but now the hard work begins. Jenkins has spent a long time explaining what he wants the new-look Barclays to deliver and now it’s time for his plan to be tested. Investors shouldn’t let him rest on his laurels for long.
Elizabeth Fournier is news editor of City A.M. @ej_fournier