Barclays boss upbeat on bank turnaround
BARCLAYS chief executive Jes Staley cast a positive light on the progress he is making in his turnaround programme, as he reiterated his commitment to shedding lower-priority assets to bolster returns.
The London-based bank’s core consumer and investment banking businesses generated a return on tangible equity of about 11 percent as of June, higher than the roughly 10 percent cost of capital most banks faced, Staley told Bloomberg Television’s Haslinda Amin in Singapore.
Expense reductions would help the core business hit management’s cost target of £13 billion (R222bn) this year, he said.
Restructuring
“If you can generate a return that is above your cost of capital, I think you’re doing reasonably well given this environment,” Staley said.
“What we need to do is to close the things that are outside our core bank.”
Barclays is in the midst of a major restructuring as Staley and his revamped management team refocus the bank on its priority markets in the UK and US to improve returns.
The chief executive is selling down the lender’s century-old African business, has pulled the investment bank out of seven countries in Asia and has eliminated a net 13 600 jobs over the past nine months.
The former JPMorgan Chase banker, who took the helm in December, has cut the London-based bank’s dividend in half to bolster capital as it disposes of its non-core assets.
As part of its global retreat, in January the bank announced it was closing offices in Australia, Taiwan, South Korea, Indonesia, Malaysia, the Philippines and Thailand, while shutting down its cash equities business in Asia, the bank’s smallest region in terms of revenue.
‘If you can generate a return that is above your cost of capital, I think you’re doing reasonably well.’
Barclays would maintain regional hubs in Hong Kong, China, Japan, Singapore and India, and said it would continue to bank large clients with connections to the US and Europe.
Barclays is third-quarter October 27.
Analysts are estimating a jump in fixed income revenue after the five major US investment banks this month posted double-digit gains in the business.
Barclays’s bond trading due to report results on income from rose 10 percent to £881 million quarter.
When asked about the prospects of European rival Deutsche Bank resolving its challenges, Staley seemed optimistic.
“Deutsche will survive,” he said, in reference to Germany’s biggest lender, which was under pressure to lower costs as mounting legal expenses threatened to undermine profitability.
Without directly referencing Deutsche Bank or any specific lender, Staley acknowledged that some banks faced challenges in boosting profitability in an environment of higher regulation and capital.
“We do need to recognise that to have a safe financial system over the long run, banks need to cover their cost of capital,” Staley said. – Bloomberg in the second