Barclays in the spotlight as banking third-quarter results loom

Barclays Canary Wharf

Barclays will become the focus of the bank reporting season this week amid speculation it is to appoint former investment banker Jes Staley as its new chief executive.

The City is awaiting a formal announcement on his recruitment during the third quarter reporting season, which kicks off this week.

Staley, who previously worked at JP Morgan, was first tipped for the job a fortnight ago, but his appointment has not been confirmed. It has prompted speculation that, in appointing a veteran investment banker, Barclays is aiming to revive the riskier parts of its operations. Staley would replace Antony Jenkins who was forced out in July.

The banking sector results come just days after the Competition and Markets Authority stepped back from any draconian steps to break up the biggest players.

Barclays reports on Thursday while bailed-out banks Lloyds Banking Group and Royal Bank of Scotland report in the coming days. HSBC, which is reviewing whether to keep its headquarters in the UK, publishes its results in a week’s time, as does Standard Chartered.

At Barclays, the chief executive’s role is temporarily being filled by the new chair, John McFarlane, whose remarks in recent weeks have raised questions about the bank’s strategy. He has voiced concerns about the ability of investment banks to compete with US rivals and floated the idea of a tie-up between European investment banks. He also appeared to be calming fears that the investment bank – which was being scaled back by Jenkins – will be reinvigorated.

Gary Greenwood, analyst at Shore Capital, noted that the US investment banks with which Barclays competes had a weak third quarter and that the bank’s African business could be hit by the value of the South African rand. “That aside, we will be hoping to get some clarity on strategy given John McFarlane’s recent comments about the need to create a European mega-investment bank to compete with US rivals and the potential appointment of Jes Staley as it new chief executive,” Greenwood said.

The bank has not confirmed Staley as its favoured candidate. But Bloomberg quoted McFarlane last week as saying: “If we hire him, we’re not hiring an investment banker.” Staley was, McFarlane said, “a client guy” who “started out as a commercial banker, like me. We might have hired someone who’s run an investment bank; well, I’ve run an investment bank. People have jumped to conclusions.”

For RBS, the publication of its results on Friday comes just days before a new window opens for the government to resume the sell-off of its stake, which has fallen to 73% from 79% after the first sale in August.

The government pledged not to sell any more shares for 90 days, which means from 2 November it could look for buyers. However, there is speculation the stake will not be cut any further until the results of stress tests, due to be unveiled on 1 December.

Lloyds will be publishing figures for the first time since George Osborne announced that the public would be able to buy shares at a discount next year. The results will be closely analysed for any further provisions for payment protection insurance mis-selling and analysts appear divided on whether the £13bn it has already set aside to tackle claims will be enough.

A progress report is also expected from National Australia Bank on its plans to spin off its Clydesdale and Yorkshire banking operations when it reports its full-year results. A stock market flotation is regarded as the most likely option for the banks, which employ more than 7,000 people and have been knocked by fines and compensation payouts for mis-sold PPI and interest rate swaps.

Powered by Guardian.co.ukThis article was written by Jill Treanor, for The Guardian on Sunday 25th October 2015 14.00 Europe/London

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