Barclays restructures amid profits fall
Barclays has reported a drop in full-year profits and a restructuring, including a reduction of its stake in its Africa business.
Underlying annual profits for 2015 fell 2% to £5.4bn.The bank said it would cut its dividend by more than half to 3p per share in 2016 and 2017.
Barclays also announced a further £1.45bn provision for PPI mis-selling.
It said it wanted to slim down into two, main core divisions – Barclays UK and Barclays Corporate & International.
The bank said it would “sell down” its 62.3% stake in its Africa business in the next two to three years.
Tainted
Barclays said it would split the company into two units, Barclays UK and Barclays Corporate and International by 2019.
The UK’s big four banks are being forced to make these changes to comply with tougher new banking regulations, which are designed to prevent ordinary customers suffering from decisions made by investment bankers in the event of another credit crisis.
Barclays, like most of the world’s major banks, has been tainted by – and fined for – rigging prices in both foreign exchange and Libor interest rates.
Mr Staley said his main aim was to restore the bank’s reputation.
Laith Khalaf, senior analyst at Hargreaves Lansdown said the new boss was clearly taking a big broom to Barclays’ operations in a bid to dramatically simplify the group.
“When the dust has cleared, the bank should have two high quality financial services divisions, and the potential to offer investors a decent dividend, but it’s going to take some elbow grease to get there.”
Pay
Barclays also said its bonus pool for staff in 2015 had shrunk 10% to £1.67bn.
Mr Staley, who took up his post in December, told the BBC that the bank was competing on an international level: “In the last four years Barclays bonus pool has been cut in half… this is a dramatic move but we need to pay competitively whether its a bank manager in Manchester or a banker in New York, we need to pay our people competitively for Barclays to be competitive.”
The annual report shows the former chief executive, Antony Jenkins, who was sacked in July, was paid £3.4m last year, of which half a million pounds was a bonus payment.
Africa
Mr Staley said that the bank’s decision on Africa, where it has had a presence for over a hundred years, had been “very difficult”.
“The reality is, in this new regulatory environment, we carry 100% of the liabilities but we only own 62% of Barclays Africa.
“It truncated possible returns from investing in Africa. “
Barclays has more than 12 million customers across 12 nations in Africa.
“You go to places like Uganda and Kenya and the brand of Barclays is as strong there as it is in the UK,” Mr Staley said.
“But we have to make some very difficult decisions if we are going to get Barclays into focused, clear, compelling business model that generates returns for our shareholders.”
Hargreaves Lansdown’s Mr Khalaf, said this move made sense as it would “will free up capital and get rid of an unwanted distraction as the bank continues its clean-up operations”.
Source: BBC
