The boss of Barclays has been forced to defend his strategy amid falling profits at the investment banking arm and a tumbling share price.
Jes Staley, who is under investigation by City regulators over his attempts to unmask a whistleblower, said at a briefing on the third-quarter results on Thursday that his two-year restructuring of the bank was now complete and he could focus on generating returns to shareholders.
Investors were not convinced, with the share price falling more than 7% – the biggest one-day drop since the vote for Brexit in June 2016 – even though the bank reported a 19% rise in nine-month profits to £3.4bn.
The focus centred on the 15% fall in profits at Barclays’ international arm – primarily its investment bank. This was driven by lower profits at the bank’s markets business, which trades foreign exchange, bonds and currencies.
“The third quarter was clearly a difficult one for our markets business … A lack of volatility in [foreign exchange, bonds and currencies] hit markets revenues hard across the industry and we were no exception to this trend,” Staley said.
The bank has reduced the amount set aside for bonuses in the third quarter of the year by 25%. Bankers receive their payouts after the full year.
Staley, an American banker who took the top job in December 2015, gave no update on the investigation by the Financial Conduct Authority, the Bank of England and US regulators into attempts to unmask a whistleblower who made allegations about a long-term associate of Staley that he had brought to work at the bank.
Staley told investors the bank’s dividend would be reviewed with the full-year results in February. He cut the payout to investors for two years while he implemented his restructuring plan to sell off its African arm and its retail banking outside the UK, which has led to a 60,000-strong fall in headcount during his tenure.
“The third quarter of 2017 was particularly significant for Barclays as it was the first for many years in which we have not been in some state of restructuing,” said Staley.
Analysts were not convinced. “Barclays investors have already endured a torrid time in 2017, and today’s [statement] offers no relief at all,” said Ian Gordon, analyst at Investec.
“Whilst we have been a seller this year, we had thought Barclays would struggle to disappoint [on] low Q3 expectations. It looks like they have succeeded,” analysts at brokers KBW said.
The bank, which owns the UK’s biggest credit card company, Barclaycard, has been charged with fraud by the Serious Fraud Office over the way it raised cash during the financial crisis. It is also fighting charges by the Department of Justice in the US over the way it sold mortgage bonds a decade ago.
There were no updates on either of these inquiries but the bank announced it had settled a long-running case with the US Federal Energy Regulatory Commission for $105m (£80m). It could have faced a bill of at least $470m for allegedly manipulating power prices in California between 2006 and 2008.
Staley said: “Whilstworking to put our remaining conduct issues behind us, we remain focused as a management team, on being in a position to distribute the returns that these plan will generate ... to shareholders.”
On his first day at Barclays, Staley bought 2.8m shares at 233p each. Just before he was recruited, the bank’s chairman, John McFarlane, had pledged to double the share price when it was trading at 260p.
The shares are now trading at 183p – below the value of the bank’s assets, which are worth around 280p a share. Staley said on Thursday that his aim was to generate enough profits to propel the banks share price above that.
This article was written by Jill Treanor, for theguardian.com on Thursday 26th October 2017 11.13 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010