LONDON (Reuters) - The likelihood of intense political and regulatory scrutiny on the new chairman and chief executive of Barclays means both must be untainted by its reputational collapse and are likely to be recruited externally, possibly from Canada or Australia.
The bank has told investors it is looking to have either one external and one internal appointment, or two external appointments, a top 10 shareholder in the bank said.
Another industry source said shareholders want both to be external.
That has left former J.P.Morgan banker Bill Winters as favorite to be CEO and former UK Cabinet Secretary Gus O’Donnell as the front-runner for chairman, according to industry sources and UK media reports.
But an outsider could come up on the rails, such as Mike Pedersen, a former Barclays banker who now heads wealth management for Canada’s TD Bank.
Canadian banks have emerged from the financial crisis far better than rivals in the United States and Europe, thanks to their more conservative strategy and risk appetite.
Pedersen, based in Toronto and a past chairman of the Canadian Bankers Association, is head of TD Bank’s wealth management and insurance businesses, as well as its IT, real estate and project management.
He joined from Barclays in July 2007, where he ran the private bank and two other international units, after being poached in 2002 from Canada’s CIBC.
Pedersen was on vacation and not immediately available for comment. Barclays and the two headhunting firms conducting the searches declined to comment.
The new chairman and CEO face stiff challenges.
Barclays was fined $450 million four weeks ago for manipulating Libor interest rates in a scandal which unearthed deep problems in its relations with regulators, who have accused the bank of frequently being too aggressive.
Both jobs look set to face increased scrutiny — and possibly interference — from UK authorities. After years of excess, the pay packets on offer are likely to shrink.
“The problem is what has unfolded with Stephen Hester,” said one headhunting industry source, referring to political interference in the running of majority state-owned Royal Bank of Scotland, where Hester is CEO.
“They could have to go outside the UK. Who here would want it...there is guaranteed political, media and public hostility.”
Bob Diamond quit as Barclays CEO on July 3, a week after the Libor scandal blew, and left immediately. Chairman Marcus Agius has said he will leave when a successor is found.
Barclays on Tuesday picked veteran lawyer Anthony Salz to lead a root-and-branch review of its culture and practices, admitting it “needs to evolve”.
The bank is expected to pick its chairman first and is under pressure from the Financial Services Authority and the Bank of England to pick people for both positions in the next three months.
A long list of candidates is being drawn up.
O’Donnell, asked if he had been approached, told BBC radio on Tuesday: “I can safely say nobody has contacted me either from headhunters or from Barclays board about that.”
The economist, who was cabinet secretary between 2005 and 2011 and was the UK’s representative at the IMF and World Bank, would bring strong connections with government. But he has also been tipped as a candidate to become governor of the Bank of England next year, so may not want the Barclays job.
Winters may not either.
He is a former co-head of J.P.Morgan’s investment bank, seen as a key attribute given that investment banking provides more than half of Barclays’ profits.
The bank is reviewing all parts of its investment bank, people familiar with the matter said, and the scale of any retreat will be a key issue for the new CEO. [ID:nL2E8INBAT]
Winters, who left the U.S. bank in 2010, was a critic of industry excesses and risk-taking and was part of a UK commission that said banks must separate their UK retail banking arms to shield taxpayers, potentially giving him political and regulatory backing.
Headhunter Spencer Stuart is helping Agius in the search for the CEO and Ana Mann’s MWM is helping John Sunderland, a Barclays non-executive director, run the chairman search.
Other CEO candidates could include RBS’s Hester; Standard Chartered Finance Director Richard Meddings; and Naguib Kheraj, a former Barclays finance director and current advisor.
Antony Jenkins, head of its retail business, is seen as a strong candidate. But he lacks investment banking experience, so one option could be to make him a co-CEO, potentially with sole control in two or three years.
Mike Smith, CEO of Australia and New Zealand Banking Group was seen as a candidate, but said last week he wanted to see through ANZ’s push to become a super-regional bank.
Gary Hoffman, who previously ran Barclaycard and nationalized UK lender Northern Rock, is favorite at bookmakers Ladbrokes and Paddy Power to land the CEO job at odds of 2/1, although few in the industry expect that to happen.
Michael Rake, deputy chairman of Barclays, ruled himself out of contention to be chairman after some shareholders said they wanted an outsider who could implement a far-reaching overhaul.
Possible candidates for the chair include Mervyn Davies, who was CEO and then chairman of Standard Chartered from 2001 until 2009 and a government minister until May 2010; David Roberts, who ran Barclays’ international banking and is deputy chairman at Lloyds; Glen Moreno, a former Citigroup banker who stepped down as a director of Lloyds this year; former financial services minister Paul Myners; or UK businessman Roger Carr. (Additional reporting by Raji Menon; Editing by David Cowell)