Barclays’ chair Nigel Higgins defended the bank’s persistently poor stock market performance at its annual meeting, telling disappointed shareholders the board believed that boosting capital returns and avoiding a repeat of recent costly scandals would improve its valuation.
On Wednesday at the lender’s AGM in Westminster in London, Higgins acknowledged that the current share price represented a “clearly unsatisfactory 50 per cent discount to our book value”, but maintained the bank had the right strategy to succeed.
Barclays’ stock has steadily declined since it embarked on a drive to grow its investment bank under former chief executive Jes Staley, a strategy continued under his successor, CS Venkatakrishnan. Since December 2015, when Staley started at the bank, the shares have dropped 43 per cent from more than £2 to £1.52, significantly underperforming Wall Street rivals.
“I would like to address the elephant in the room . . . It is embarrassing to see Barclays hovering between 150p and 170p and in a downward decline all the time,” said one individual investor. “I am not going to harp on like a peasant wanting money. But promises have been made to shareholders for decades now . . . If you don’t address the dividend Barclays will always be a £1 to £2 share.”
“You’ve hit the nail on the head,” Higgins replied. “We are very conscious [the share price] has been disappointing for most of the past decade . . . But we are absolutely focused on improving the share price and capital returns.”
Higgins argued that a 27 per cent increase in net profit in the first quarter showed positive momentum and that the bank had raised its dividend to 7.25p and bought back £1bn of shares at a discount last year.
He added that it was “particularly important given the shrinking European investment banking world, we must ensure that you, our shareholders properly understand how we as a business make money and why our model and strategy is the right one for the bank”.
Another small shareholder asked if the bank could improve its valuation by moving its domicile and listing to New York, following a wave of companies abandoning London after Brexit and because of more onerous stock market rules.
“This is a British bank, we’ve been here for 300 years, and our objective is to deal with the valuation question in other ways,” Higgins said, ruling it out.
For much of the rest of the AGM, Higgins fielded a range of questions from climate activists criticising its policies on fossil fuel financing.
The start of the meeting was delayed by 25 minutes by chanting protesters. One group of women sang about ending fossil fuel financing to the tune of the Spice Girls’ 1998 hit, “Stop (Right Now)”.
Others stood on their chairs periodically during the meeting, riffing on a soliloquy from Hamlet: “Don’t shuffle us off this mortal coil, Barclays keep it in the soil”. An increasingly frustrated Higgins replied, “we would like to shuffle you off out of here . . . enough is enough”.
More than 30 security staff patrolled the room, escorting or carrying out the dozens of activists who disrupted the meeting. In often tense exchanges between protesters and board members, one person accused Higgins of “arrogance and hubris” for his comments.
Ahead of the meeting, proxy advisers had criticised the board. Glass Lewis said executives did not take enough of a hit on pay after a trading error led to the bank improperly selling $17.7bn of structured financial products. That scandal resulted in more than £700mn in settlement and compensation costs, denting annual profit.
ISS said shareholders should use the annual meeting to question the board over its support of Staley, who directors continued to back before his resignation in November 2021 despite revelations about his close friendship with deceased sex offender Jeffrey Epstein.
Staley resigned amid a UK regulatory probe into how he characterised his past relationship with Epstein.
However, the subject was not addressed by shareholders.
The results of shareholder votes on resolutions and director re-elections will be released later on Wednesday.
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