Barclays unveils bank shake-up as losses double
Barclays on Tuesday announced a further shake-up of the bank's operations after losses more than doubled last year, as it seeks to restore its battered reputation under new leadership. The British lender, struggling to recover from several scandals, said it would split the bank into two units, focusing on its operations in Britain and the United States.
And after announcing in January plans to exit Russia, Barclays on Tuesday said it would reduce its majority stake in the group's African unit.
"At the heart of Barclays strategy is to build on our strength as a transatlantic consumer, corporate and investment bank anchored in the two financial centres of the world, London and New York," Barclays said in a statement. It plans to split the company in two to form Barclays UK as well as Barclays Corporate and International. "We are today announcing our intention to sell down our 62.3-percent interest in our African business, BAGL, over the coming two to three years," it said.
It comes as Barclays revealed annual losses after tax of Â£394 million ($549 million, 505 million euros) for the bank as a whole. The 2015 net loss, compared to one of Â£174 million a year earlier, was largely the result of money set aside to compensate customers mis-sold a controversial insurance product, or PPI.
Barclays is facing major changes under new chief executive Jes Staley, an American veteran banker who began his latest role in December. Staley has been tasked with restoring the bank's battered reputation caused by a series of scandals including the rigging of foreign exchange and Libor interest rate markets.
Barclays fired its then-chief executive Antony Jenkins in July as he struggled to turn around the bank's fortunes, but not before he triggered plans to axe thousands of jobs. A new round of cuts was revealed in January, with Staley slashing 1,200 positions at its investment banking division, alongside news that he was closing offices across Asia.
Barclays is one of several banks implementing job cuts amid a tough investment climate as slowing global growth and stricter capital rules affect lenders.
Michael Hewson, chief market analyst at CMC Markets UK, said Barclays' move to a two-division bank was "reminiscent of a simpler structure back in the 1980s". In morning trade, shares in Barclays were down 6.1 percent at 161.5 pence on London's benchmark FTSE 100 index, which was up 0.7 percent overall. "Barclays has reported a 2.0-percent drop in underlying profits, while also announcing that it will cut its dividend by more than half," Graham Spooner, investment research analyst at The Share Centre, said in reaction to the heavy share price drop.