John McFarlane’s first results as Barclays executive chairman are pretty good, with profits up all over the business. Kind of convenient, given he can’t really take much credit for them, having fired chief executive Antony Jenkins just three weeks ago.
Pre-tax profits for the first half of the year rose 25% year-on-year to £3.1bn, boosted by profits at the investment bank soaring 36% to £1.4bn. That’s despite Jenkins, a retail banker, having got the chop in large part because he was seen not to ‘get’ the lucrative division.
No new job cuts were announced either. Finance chief Tushar Morzaria, one of the internal frontrunners for the chief exec job, played down reports that tens of thousands more roles were set to go, after Jenkins axed 19,000 staff in his three-year tenure. That doesn’t mean, of course, that there won’t be quiet firings.
Nonetheless, what is McFarlane’s grand plan? ‘Mac the Knife’, so-called after he fired and stepped in to replace the chief exec of insurer Aviva when he became chairman in 2012, a trick he repeated at Barclays, is turning his axe to the bank’s bureaucracy and relatively high costs (its cost-income ratio is 70%, compared to 62% at JP Morgan and Citigroup, for example).
But... but... Mac looks so mild-mannered!
Jenkins had started cost-cutting, but McFarlane said that needed to ‘accelerate’, a word he used four times in his statement. ‘We need to be much more customer and client orientated in our approach, to streamline and eliminate unnecessary and cumbersome bureaucracy, and to embed direct accountability for activities within our businesses,’ he said.
Investors didn’t let all those unnecessary words put them off: Barclays’ shares were up more than 2% in mid-morning trading and have now risen more than 13% since McFarlane took the reins. He doesn’t seem to be in a hurry to hand them over either – there was not a single mention of the succession process in the results statement.