City sharpens knife for Pru’s chairman

SEVERAL institutional shareholders are agitating for the resignation of Prudential chairman Harvey McGrath as pressure grows on the board over the aborted attempt to buy AIA in Asia for $35.5bn (£25bn).

Fidelity, Legal & General, Schroders and F&C are understood to be among those demanding a change at the top of the FTSE 100 insurer, which was forced to pay £450m in advisory and break fees on the failed bid for AIG’s Far Eastern operations. Fidelity is due to meet McGrath and senior independent director James Ross today, while Schroders will meet them later in the week.

Lord Myners, the former City minister and ex-chairman of Marks & Spencer, and Jim Schiro, the former chief executive of Zurich Financial Services, were named in the weekend press as possible candidates for McGrath’s role. Naguib Kheraj, the former chief executive of JPMorgan Cazenove, and Michael McLintock, the head of fund manager M&G, have been mooted as potential successors to Prudential boss Tidjane Thiam.

Sources close to Prudential said the firm would continue to meet with City investors, many of whom are dismayed at the fall-out from the AIA move. Although the board recognises some shareholders want a change of management, it believes the majority are in favour of McGrath and Thiam staying on.

One problem for frustrated investors is the dearth of talent in the highest echelon of the insurance sector. Thiam, who held positions at McKinsey and Aviva before becoming finance director and then head of Prudential, is seen as a talented manager by many despite his gaffes during the AIA process.

While more hawkish fund managers would prefer McGrath’s head in the near term, many also want Thiam to depart soon after.