INVESTORS cheered the appointment of Sir David Walker as chairman of Barclays yesterday, sending shares higher in the scandal-hit blue eagle bank.
The 72-year-old is a former Bank of England and Treasury official who wrote one of the most significant corporate governance manuals for banks and has investment banking experience from 17 years at Morgan Stanley.
“I would say this is a good, old-fashioned Bank of England-driven appointment,” said Martin Vander Weyer, the Helmsley-based business writer and former investment banker.
He said it was a reminder of the days when it was commonplace for the Bank to send in a ‘safe pair of hands’ to run any big institution that was in trouble.
Mr Vander Weyer, who wrote the book Falling Eagle: The Decline Of Barclays Bank, added: “Walker has an impeccable financial-establishment CV, and long experience of troubleshooting beginning with Johnson Matthey in the ’80s, but at 72 he can’t be there for more than three years at the outside. So he’s a very respectable and respected caretaker.”
While welcoming an end to uncertainty over Barclays’ leadership, some investors hoped he would have the stamina to steer the bank through one of the most challenging periods in its history.
“I am sure 70 is the new 50 but it will be tricky,” one top 40 shareholder said.
“What they have to do for the next year or 18 months is to rebuild relationships.
“He will have to help find a CEO who is good with the Americans,” the investor added.
Sir David has been offered a three-year term to spearhead the bank’s recovery efforts and will find the tasks of cutting pay, improving business culture and picking a new CEO bold enough to change strategy at the top of his agenda.
He said he would be “fully engaged” in the hunt for a replacement for Bob Diamond, picking up the baton from outgoing chairman Marcus Agius who has told staff he was encouraged by the quality of candidates seen so far.
Another key issue for new bosses is the future of the investment bank, which many analysts expect to be shrunk.
“His strong regulatory background and preference towards longer deferral of bonuses will be a positive in terms of lowering the cost of equity and improving returns for shareholders,” said Andrew Lim, analyst at Espirito Santo.
But Mr Lim added that Walker may “rein in Barclays’ more ambitious investment banking operations”, which could negatively affect returns in a business that is doing well against rivals.
Guy Jubb, global head of governance and stewardship at Standard Life Investments, a top 10 shareholder, said he hoped the appointment marked the beginning of a new chapter for Barclays.
“We are confident Sir David is the right man for the job. This will be good for Barclays and good for the City of London,” Mr Jubb added.
Jonathan Chenevix-Trench, who succeeded him as chairman of Morgan Stanley International, said: “His view always is that reputation and integrity go far beyond short-term profit.”
The bank said he would become a director at the start of September and take the chairman’s seat two months later.