By Steve Slater and Sinead Cruise
LONDON (Reuters) - Barclays (LONDON:BARC) has joined three other European banks in ousting its chief executive, a top-level clear out that has raised expectations of big changes at the banks and triggered an $8 billion (5.21 billion pounds) jump in their market value.
Barclays and others banks have struggled to revive their fortunes and provide attractive returns for investors after the financial crisis because of tougher regulations and high costs.
Barclays Chairman John McFarlane said the new CEO, who has not yet been chosen, needs to cut the bank's assets more aggressively and accelerate an increase in shareholder value. He has ruled out the need to raise capital.
The new leadership at Standard Chartered (LONDON:STAN), Credit Suisse (SIX:CSGN) and Deutsche Bank (XETRA:DBKGn) could speed up that slow pace of change since the crisis.
European banks have taken longer to recover than rivals elsewhere. The return on equity of European banks averaged less than 9 percent last year, compared to about 15 percent in North America.
New CEOs Tidjane Thiam at Credit Suisse, Bill Winters at Standard Chartered and John Cryan at Deutsche Bank could tap existing shareholders for cash to improve capital strength and provide growth options, bankers and analysts said.
But they will only succeed if they simultaneously offer a convincing revival plan.
"If you want investors to focus on your operational performance rather than your cash position, the obvious thing to do is to take whatever action necessary to put that cash position beyond doubt or criticism," Guy de Blonay, fund manager at Jupiter Asset Management, said.
"A cash call should be received relatively well if the strategy makes sense, and if there's a new leader at the helm, who can articulate clearly what is best for the company."
The new CEOs are meeting investors, regulators and staff to review the businesses they have inherited and are expected to unveil plans between October and the end of the year.
EXPECTATIONS HIGH
The favourite to take over at Barclays is the bank's finance director Tushar Morzaria, 46, who joined from JPMorgan (NYSE:JPM) two years ago, although the bank said it will look at external candidates.
McFarlane said the new Barclays boss needed to be able to "motivate the organisation."
There are expectations that Winters, Thiam and Cryan, all in their early 50s, can balance hard pruning with more coherent growth plans.
Cryan faces the toughest task. He inherits a bank with one of the lowest valuations in the global industry, partly due to worries about its over-reliance on investment banking and low-return German retail banking.
The former investment banker spent years advising banks on strategy before becoming finance director at UBS in 2008, when he helped negotiate its rescue by the Swiss government. He has told staff to expect tough reforms as Deutsche is too complex.
He is expected to make cuts but also try to maintain Deutsche's position as Europe's leading investment bank. After Deutsche raised $11 billion in June 2014 Cryan is likely to put off raising cash again to next year, investors and bankers said.
"The priority now will be fine-tuning the strategy, concentrating on cost cuts and disposing of non core units in a more systematic fashion," Filippo Alloatti, senior credit analyst at Hermes Investment Management, said.
Winters also has a lot of work to do. The former co-CEO of JPMorgan's investment bank was one of five members of a British government commission set up to make banks safer.
He is expected to cut the number of countries Standard Chartered operates in, speed up decision-making and ramp up existing cost-cutting plans.
His plans could include setting aside more money for loan losses, which could be accompanied by raising $5 billion or more from a rights issue and cutting the dividend, bankers and analysts said.
Thiam, former boss of Prudential (LONDON:PRU), could raise between 6-12 billion Swiss francs ($6.3-$12.7 billion) to improve capital ratios and amass firepower for growth, the bankers and analysts said.
Thiam is expected to slim down the investment bank and weed out weaker areas, while expanding wealth and asset management in Asia.
"The CEO has a reputation for asset gathering ... and you could see him sell a capital raising story on the idea of turning CS into something more than just a bank but an asset manager as well," Alloatti said.
NEW BOSSES WARN STAFF: "BEHAVE"
Barclays' new boss is almost certain to follow Thiam, Winters and Cryan in another major challenge: addressing compliance and standards, after problems with authorities in the United States and elsewhere.
In messages to staff on their first days, the CEOs pledged to uphold standards and hold staff accountable for any wrongdoing.
Shares in Barclays, Credit Suisse and particularly Standard Chartered and Deutsche Bank have lagged rivals in the past 18 months, partly due to hefty fines for misconduct.
But on the days when CEO changes were announced, Credit Suisse shares rose 8 percent, Standard Chartered 5 percent, Deutsche 4 percent and Barclays 2 percent, adding a combined $7.9 billion to their market values.
Matching the expectations reflected in the share price jump could be the CEOs' biggest challenge. Thiam said two years ago expectations can leave a CEO feeling like they are walking a tightrope.
"If you really believe in what it is you are trying to achieve it helps you go through a journey and walk without looking down," Thiam said.