Barclays CEO’s fightback goes on

Managing Barclays is an exercise in swordplay. CEO Jes Staley, like a modern-day Errol Flynn, has fenced his enemies up and down stone staircases, dodging regulators and activists and fending off the rapier cuts of low interest rates. Now, four years later, he can take heart from the latest set of results.

These numbers struck the right note for a bank keen to keep its castle intact. Staley has clashed swords with one presumptuous invader, Edward Bramson, whose efforts to force a sale of the investment bank division were neatly stymied. Good thing, too, as it transpires; the unit performed creditably in the quarter. Fixed income and commodities was a star performer, up 19% year on year in sterling terms. Banking fees from deals did even better. Flattish costs there helped profitability.

With a reasonably strong common equity tier-one capital ratio comfortably above 13%, Staley has slain several traditional assailants. Investors might ask for payback from any extra capital generated over the next year. Staley, noting that Barclays trades at half book value, says any extra distribution will be via share buybacks rather than dividends. Partly to his credit, the valuation gap, in terms of price to tangible book, between Barclays and its European peers narrowed over the past two years.

That is not enough to win over investors yet. Yes, Barclays group return on tangible equity year to date at 9.7% meets his target of exceeding 9% for the full year. But a fourth quarter with the extra burden of the UK bank levy may look less attractive. And even if its fixed income, currencies and commodities traders manage to hit another bull’s-eye, the investment banking unit should still drag back the group’s capital returns. Hence Friday’s modest rise in share price, only two months after a five-year low. Like the dashing hero in the movies, Staley’s fightback will run for a while longer yet. /London, October 28

© The Financial Times 2019