BARC Barclays Plc

By Max Colchester 

Barclays PLC's will look externally for a new chairman after front-runner Gerry Grimstone unexpectedly pulled out of the race to head the British bank.

Barclays's current chairman John McFarlane said Tuesday that he had asked the board to search for his replacement. Mr. McFarlane hasn't said when he will go and pledged to serve at least one more year at the British bank. "While some might wish so, you are not getting rid of me yet," said Mr. McFarlane at the bank's annual shareholder meeting on Tuesday.

Mr. Grimstone, who is the chairman of Standard Life Aberdeen PLC and chairs the international banking unit at Barclays, was tipped by insiders to take over the reins. Mr. Grimstone however has decided not to apply for the job, according to people familiar with the matter.

Mr. Grimstone is a key ally of Barclays Chief Executive Jes Staley in his push to re-invigorate the investment banking business at Barclays. Mr. Grimstone has been a keen advocate of bolstering the trading unit, which has struggled with low profits over recent years.

That strategy has come under focus lately with the arrival of activist investor Edward Bramson. Mr. Bramson's Sherborne Investors recently took a 5% stake in the bank, raising concerns within Barclays that Mr. Bramson would push for a more radical shake up of the bank's trading business.

Management have pointed to the strong revenues generated by the trading desks in the first three months of the year as proof that no more radical surgery is needed. While shares had rallied in the lead up to the results announced at the end of April, they dipped soon after on fears that Barclays doesn't have the capital reserves to hand cash back to shareholders soon. Mr. Staley is set to meet Mr. Bramson next week.

At the bank's annual general meeting Mr. Staley looked to appease shareholders listing off numerous initiatives the bank has undertaken to cut costs and deal with past misdeeds since his arrival in late 2015. "This is just the beginning," he said. "At the right time, some time down the road," the bank will initiate a stock buyback, said Mr. Staley.

Mr. McFarlane continued to defend Mr. Staley after the U.S. banker was cleared by regulators to continue to run the bank despite his efforts to unmask a whistleblower. "We think it was simply a mistake," Mr. McFarlane said.

Sky News first reported Mr. Grimstone's decision.

Write to Max Colchester at max.colchester@wsj.com

(END) Dow Jones Newswires

May 01, 2018 07:09 ET (11:09 GMT)

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