Barclays chief feels the heat as shares tank
JES Staley’s blueprint to transform Barclays suffered a setback yesterday as investors wiped £2.2bn off the bank’s value following a slump at its trading arm.
Relatively calm markets have hit investment banks across the US and Europe by reducing demand for services as fewer customers move their money around.
But Barclays suffered a particularly steep decline – with fixed income, currencies and commodities revenues down 34pc – a serious blow for chief executive Staley, who has sought to beef up the bank while ending its century-long presence in Africa.
Barclays suffered its worst one-day fall on the stock market since the immediate aftermath of the Brexit vote, with shares down 7.4pc, or 14.6p, to 182.4p. Shares have fallen 18pc since Staley took charge in December 2015 – wiping £7bn off the value of the bank.
‘The third quarter was clearly a difficult one for our markets business,’ he said. A lack of volume and volatility in fixed income, currencies and commodities hit market revenues hard across the industry, and we were no exception to this trend.’
Investment banking revenues at German lender Deutsche Bank were also down in the period, it said yesterday, dropping nearly a quarter. Its shares fell 0.6pc in Frankfurt. Staley took over Barclays in December 2015 after his predecessor Antony Jenkins was sacked for failing to turn it around fast enough.
He has since staked its future on being a consumer and investment bank in Britain and the US, selling anything which is not essential to achieving that aim.
As well as pulling out of Africa – completely contradicting the direction of brash ex-boss Bob Diamond, whose love of the continent earned him the nickname ‘Safari Bob’ before he quit in disgrace in 2012 over the Libor raterigging scandal – Barclays has cut its balance sheet by £300bn and axed 60,000 jobs in two years.
This massive restructuring is largely complete, and the lender also won much-needed respite from big fines and compensation bills in the third quarter.
It paid out just £81m to deal with past issues, including a smaller-than-expected £79m settlement with US authorities over claims of energy market rigging. Because it had to set less cash aside to pay for past misdeeds, profits for the period were up 32pc at £1.1bn. This did not mollify traders, who focused on the difficulties in the trading arm. Several top 20 investors are reportedly sceptical about Staley’s plan to pump cash into the investment bank, preferring a focus on the lender’s dominant credit card business.
Investec analyst Ian Gordon said: ‘Barclays investors have already endured a torrid time in 2017, and the third quarter offers no relief at all.’
The past could yet return to haunt Barclays. In August, the Financial Conduct Authority launched a £43m campaign to raise awareness of payments protection insurance mis- selling ahead of a compensation claims deadline in 2019.
The lender has set aside £9.1bn to deal with claims and said there had been a spike since the campaign began, although 60pc of callers do not qualify for payouts. Staley, meanwhile, is facing an FCA investigation into claims he sacked a whistleblower, which could see him publicly ticked off or, at worst, stripped of his job.
And, along with several former directors, the bank is set for a fraud trial in 2019 over a controversial £7.3bn fundraising at the height of the financial crisis.