A 'deteriorating investment banking revenue environment could provide the catalyst for change'.
Bloomberg News reports that Barclays CEO Jes Staley should deepen cuts at the investment bank as the industry outlook deteriorates, and focus on its more profitable consumer and credit card businesses, according to JPMorgan Chase.
The securities unit will generate a return on equity of less than 7% in the next three years, even if it eliminates 600 million pounds ($865 million) of costs, analyst Raul Sinha wrote in a report Thursday. The measure of profitability lags an average 14 percent return at its other businesses, he said. JPMorgan also estimates Barclays will have another 4 billion pounds of litigation and redress costs until the end of 2018.
A 'deteriorating investment banking revenue environment could provide the catalyst for change', Sinha said. 'Weakness will continue to dilute the group’s core returns, partly eclipsing strong franchises in U.K. retail and corporate, Barclaycard and Barclays Africa'.
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