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Last week, Barclays (LSE:BARC) officially announced the appointment of Sir David Walker as its new chairman. He will become one of the bank’s directors on 1 September and replace current Chairman Marcus Agius on 1 November.
Sir David Walker has extensive experience in investment banking as well as government and regulations. He has spent time as assistant secretary at the Treasury, executive director for the Bank of England, and deputy chairman for Lloyds Bank. Walker also has experience leading government reviews of bank governance and executives’ wages. Most recently, he served as chairman and senior advisor to Morgan Stanley.
In the short time since the announcement, Sir David Walker has already indicated some of the issues he will highlight to bring Barclays back to the prominence it held before the Libor-rate rigging scandal. One of his top priorities is to search and appoint a new CEO, as Bob Diamond was forced to resign in the midst of Barclays’ downfall earlier this summer. The search will consider in-house employees as well as other executives from international firms.
Regardless of whom takes over as the new CEO, adjustments to executives’ salaries are expected. In previous positions, David Walker has advocated for cutting back on executives’ compensation, while calling for increased time commitments and experience among directors. Amid the difficult economic situations, executives’ outlandish wages have been a popular topic and Walker’s appointment as Chairman may be a sign that changes will be made.
Walker has also announced his intentions to continue the bank’s retail and investment banking divisions, but would like to accelerate the “ring-fencing” process so that these branches are functionally separated by the government’s 2019 deadline. This is somewhat unexpected as large risks and funds associated with investment banking have made it a less attractive business venture in the years since the financial crisis.
Lastly, Walker has supported the principle of charging customers for current bank accounts. He argues opening this stream of revenue would decrease a bank’s incentives to mis-sell interest rate swaps to small businesses and payment protection insurance. Although this does not guarantee Barclays’ customers will begin paying for their accounts, it is definitely an indication that it is possible.
The announcement that David Walker will be Barclays’ new chairman has brought some stability to its share price. Although it is still about 5% below its pre-scandal value, the move to fill one of the vacated executive positions has resulted in small growth in the share price. David Walker’s background in government and regulations as well as his opposition to executives’ current wage levels give Barclays some credibility as it continues its attempts to move past the Libor-rate rigging scandal.
While the bank has been one of the worst performers in its sector this year, David Walker will definitely be able to provide valuable experience and insight in the search for a new CEO and for Barclays long-term business plan.
