Barclays investment banking unit might not be appropriate size

Honey I Shrunk The Banks

Does size matter ?

Antony Jenkins replaced Robert Diamond as Barclays chief executive officer 19 months ago, pledging to control costs at the investment bank and boost returns. So far, both goals are eluding him.

Bloomberg reports that Jenkins, 52, is trying to revive profitability at the securities unit, the biggest source of income for the firm, while wrestling with demands for higher pay from its bankers. He has fallen behind on targets he set as CEO and faces calls to outline a clear plan as he prepares to meet shareholders at the annual meeting next month.

'We want them to tell us when they can deliver an acceptable return on capital', said Robert Talbut, who as chief investment officer of Royal London Asset Management $123bn including Barclays shares. 'My expectation is that Barclays will come back and say their size and shape of the investment bank is not appropriate for the business they require'.

Return on average equity at the securities unit, a measure of profitability, fell to 8.2% last year from 13% in 2012, short of his target of at least 11% in 2015. Compensation as a proportion of investment-banking revenue rose to 43.2% in 2013 from about 40% the previous year. That’s short of the 35% target Jenkins set for 2015.

To access the complete Bloomberg article hit the link below

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