Bar­clays un­veils bank shake-up as losses dou­ble

The Pak Banker - - FRONT PAGE -

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 £394 mil­lion ($549 mil­lion, 505 mil­lion euros) for the bank as a whole. The 2015 net loss, com­pared to one of £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.

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