Financial News

  • 2 July 2014, 11:13

Ex-Barclays Director To Chair Investor Body

A former member of Barclays' boardroom pay committee is to chair a new body that will try to counter accusations that the City is obsessed by short-term gains rather than the long-term health of the UK economy.

Sky News has learnt that Simon Fraser, who recently stepped down as a non-executive director of the bank, which has endured a fractious recent relationship with shareholders, is to chair a new panel for major investors.

The new body, which is expected to be endorsed by Vince Cable, the Business Secretary, this week, is being established in the wake of a review completed last year by Professor John Kay, the economist.

The Investor Forum, as it has been informally named, will for the first time include representation from both UK and overseas investors such as major sovereign wealth funds and pension funds.

It will aim to provide a platform for investors to address governance and other obstacles to long-term wealth creation amid concerns, for example, that too many British-based companies have fallen into foreign ownership with little regard for the consequences for the UK economy.

It will also aim to wrest back the debate over the stewardship of British companies from corporate governance specialists, who frequently dominate decision-making processes at fund managers at the expense of those responsible for the actual shareholdings.

Sources said that Mr Fraser would be named as the Forum's inaugural chairman in an announcement to be made on Wednesday.

Andy Griffiths, a former executive at Capital International, the asset management group, will be appointed as the Forum's executive director, sources said on Tuesday.

Mr Fraser stepped down from the Barclays board at its annual meeting in April after completing five years on the board.

He is a well-known figure in the City, having spent more than 25 years at Fidelity, the fund management giant, including a stint as its global chief investment officer.

His role in helping to set pay levels at Barclays may raise some eyebrows, however, given the bruising series of revolts against bonuses suffered by the bank in recent years.

Sources said the appointments underlined the intention of estbalishing the new organisation as the most important new voice for investors in the UK economy for decades.

"For the first time there will be a body that draws in UK and overseas investors in UK companies: a body that will be able to speak with a single voice on areas of significant concern," said one leading fund manager.

"Leadership is provided by genuine investors with an interest in stewardship and cannot be dismissed as being dominated by 'governance' specialists who may not speak for real money."

City figures involved in the selection of Mr Fraser and Mr Griffiths declined to comment ahead of Wednesday's announcement, but pointed to a statement in March, which outlined the objectives of the Investor Forum, saying that its purpose would be to "invest in and support companies with credible strategies for sustainable competitive advantage leading to long-term wealth creation".

The debate about City short-termism reared its head recently with the 69bn bid for AstraZeneca, the UK drugs company, by Pfizer of the US.

The offer was rebuffed, although many investors expect a revised offer later in the year, with possible implications for British research and development jobs.

The Investor Forum's launch comes amid a broader shake-up of City stewardship.

The influential investment affairs division of the Association of British Insurers is being merged with the Investment Management Association to create a new body, The Investment Association.

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