Barclays shareholder fury over lack of change at top

BARCLAYS BANK is expected to provoke fury among its institutional shareholders this week by failing to announce a new chief executive when it unveils its interim results on Thursday.

This may further undermine confidence in the bank among shareholders, who are anxious to see positive signs that it is strengthening its weak management team.

Until a few days ago, shareholders believed Barclays was close to announcing the addition to its senior management team, but it now appears that the bank is still not ready to do so. It began looking for a chief executive about six months ago, when Andrew Buxton reluctantly agreed to relinquish the role after intense shareholder pressure. Mr Buxton remains as chairman, and he continues to act as chief executive until a replacement can be found.

'We will be very disappointed and angry if they don't announce the appointment next week,' one leading shareholder said last Friday. The failure to find a chief executive is likely to further damage investors' confidence in Barclays's management.

The bank has thrown its net wide in a search for suitable candidates. Leading US bankers are believed to have been approached by Spencer Stuart, the headhunter, and British businessmen outside commercial banking are also being considered. The search is being led by Sir Denys Henderson, chairman of ICI and a non-executive director of Barclays. But there is still hope among some shareholders that the bank is close to making an appointment.

The search has run into two big problems. One is in finding someone acceptable to Barclays' senior directors. Several UK candidates are believed to have been rejected on the grounds that the heads of Barclays's main operating divisions would have refused to work under them.

The other problem has been in defining the role of the new chief executive. Mr Buxton intends to remain an executive chairman with considerable power. It has proved difficult to persuade high-calibre bankers that the chief executive's job would be important enough to tempt them.

The long delay in finding a candidate has already persuaded some institutional investors that Barclays is not looking seriously. They believe the bank is hoping that the passage of time and an expected improvement in profits will persuade shareholders to stop insisting on the appointment of a chief executive. By default, Mr Buxton would then continue to hold his dual role.

But Barclays's interim results are not likely to be good enough to deflect anger away from the failure to find a new chief executive. Pre-tax profits will be around pounds 115m, compared with a loss for last year of pounds 242m. Provisions against bad debts, however, will be up on the first half of last year, at about pounds 1.1bn, proving that Barclays' loan book is still suffering badly from the effects of the recession.

Mr Buxton was held partly responsible for the lending policies since the mid-1980s that led to the deterioration in the bank's performance.

Hopes of an improvement this year were stirred last week, when Lloyds Bank announced a 35 per cent jump in pre-tax profits to pounds 498m for the first six months, while bad-debt provisions fell sharply.

The bank raised its interim dividend by 12 per cent. However, the shares dropped 17p because operating profits showed a rise of only 10 per cent. The relatively sluggish increase suggested UK profits were beginning to level off as loan volume failed to rise significantly. Analysts said this was likely to be the trend in clearing bank results over the next few weeks.

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