Barclays has failed to win the all-clear from a powerful investors' group about the way it is using complex financial instruments to raise capital and pay its bankers.
The Association of British Insurers, whose members control some 15% of the stock market and were involved in last year's revolt over pay at Barclays, has issued an "amber top" alert, urging investors to think twice before backing the bank, before its crucial shareholder meeting in the Royal Festival Hall on 25 April.
The Barclays AGM will be the first meeting chaired by Sir David Walker, appointed after the Libor rigging scandal which forced out his predecessor, Marcus Agius, the chief executive, Bob Diamond and the chief operating officer, Jerry del Missier. The finance director Chris Lucas is also to depart after his successor is named.
In the notice of the annual meeting, Walker writes: "The circumstances of my appointment as chairman are well known. You will have your own views and questions on the events of last year and on our strategy of becoming the go-to bank, and we encourage you to use the meeting as opportunity to express these by attending, raising questions and voting".
The association is highlighting a decision by Barclays to issue contingent capital bonds – knowns as CoCos – which convert into shares if the bank runs short of capital to bolster its financial strength and pay bonuses to staff. The association is understood to be warning on a technical matter involving the way CoCos could potentially dilute the interests of existing shareholders by forcing new shares to be issued if the bank's capital levels fall short.
Another body which advises investors on how to vote at annual meetings – the ISS – has also raised the issue of these so-called CoCos, which regulators are encouraging banks to use. However, it has concluded that Barclays has taken steps to mitigate any risk of dilution for existing shareholders.
Separate resolutions related to the bank's ability to issue new shares are being put to investors at the annual meeting because of the issue of CoCos, on top of the usual resolutions on the remuneration report and the election of directors.
ISS has also recommended investors vote in favour of the remuneration report while flagging the termination payout of £2.4m for Diamond. ISS acknowledges that the company has made "several positive changes" on pay policies even though it paid out £1.8bn in bonuses – compared to £1.4bn paid out in dividends. Advisory body Pirc has recommended voting against the remuneration report.
Barclays on Tuesday restated its results for 2012, because of new accounting rules and a decision to redistribute head office costs into individual businesses. Pretax profit in 2012 would have been £7.6bn under the new rules compared with the £7bn published while the crucial core Tier 1 capital ratio was restated as 10.8%, down slightly from 10.9%.
The outcome of the meeting on Thursday may be indicator of whether there will be re-run of last year's "shareholder spring" when a record number of remuneration reports were voted down. At Barclays 31.5% of investors failed to back its pay plans.
Leading investment group Standard Life last week spoke out at the BP annual meeting and in the coming weeks many companies will face potentially hostile annual meetings, including Trinity Mirror which paid its chief executive Sly Bailey £2.3m after her departure. She was ousted as chief executive during last year's shareholder spring.
Pharmaceutical company Astra Zeneca is also facing dissent over the signing-on fee for Pascal Soirot, its new chief executive. Soirot replaced David Brennan, who was also forced out by shareholders last year.
The ABI has three levels of warnings – a red top to indicate serious levels of corporate governance concerns, an amber top which is a less severe alert and a blue top which indicates no obvious breaches of corporate governance codes. It declined to comment, as did Barclays.
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