LONDON (Reuters) - New Barclays Chairman John McFarlane said the British bank still faces formidable challenges and signaled his intention to accelerate its turnaround plan within an hour of taking charge.McFarlane took the helm after Thursday's annual shareholder meeting, charged with overseeing its attempts to stamp out wrongdoing and improve performance, and immediately set out his priorities in a letter to shareholders."We ... need to get the errors of the past behind us, to achieve a satisfactory rate of revenue growth, greater cost discipline and a more dynamic reallocation of capital," he said.McFarlane acknowledged that the poor performance of Barclays shares -- trading below most British lenders at 0.7 times the value of its assets -- mean that the bank is still "a recovery proposition for shareholders".Barclays says it is on the road to recovery under Chief Executive Antony Jenkins, but it still needs to resolve allegations over alleged misconduct in the past while bringing returns back above its cost of capital and deciding how big to keep its investment banking operation.McFarlane, who oversaw a radical turnaround of insurer Aviva , said he is optimistic of a successful outcome, having dealt with similar situations in the past.That could include the axing of businesses that struggle to make a decent return. "We need to ... put in place plans and action to improve them or curtail those that are unable to be resuscitated," McFarlane said.'BRING YOUR CHAINSAW'McFarlane’s reputation as a no-nonsense boss was referred to by several investors at the meeting. Shareholder Philip Meadowcroft said the incoming chairman is a "ruthless turnaround specialist" who needs to enforce overdue cultural and structural change at Barclays. Another investor urged him to "bring his chainsaw from Aviva".One priority decision will be whether to continue shrinking Barclays' investment bank. Jenkins is cutting 7,000 jobs from the business -- about a quarter of the total -- but has said he could go further after it delivered return on equity of only 2.7 percent last year as tougher regulations hit profitability.McFarlane, a Scot, was appointed in September and has been on the Barclays board since January.He said the bank needed to press ahead with work to restructure its legal entities in Britain and the United States and run down 75 billion pounds ($112.9 billion) of assets it no longer wants.CEO Jenkins told the meeting he expects to continue to run down that portfolio this year, cut more costs and make good progress on settling outstanding investigations into the misconduct issues, such as alleged manipulation of foreign exchange rates."Resolving these issues is an important part of our plan for Barclays and I expect that we will make significant, though sometimes difficult, progress in this area in 2015," he said.The bank avoided the firestorm of criticism over staff pay that has overshadowed recent AGMs, with 97.5 percent of shareholders who voted approving its remuneration report. All other resolutions also passed easily. (Editing by Keith Weir and David Goodman)
