Barclays is considering a retrenchment from continental Europe which could include the sale of its business in France, Spain, Italy and Portugal as part of its strategic review to be unveiled this week.
Antony Jenkins, chief executive, is expected to announce that most of the bank’s retail operations in western Europe could be put up for sale as part of the cost-cutting and restructuring exercise, according to reports in The Sunday Times. The strategic review, due on Thursday, is the second in Mr Jenkins’ two-year tenure.
He hopes it will relieve some of pressure Barclays is under at the moment from shareholders and the City, as well as politicians. Tomorrow the bank is due to deliver first quarter results and has already warned that profits will be hit due to a slowdown in fixed-income trading. This weekend, it emerged that Ros Stephenson, chairman of investment banking at Barclays, has quit to join UBS. The departure followed the resignation last week of Hugh “Skip” McGee, chief executive of Barclays Americas and one of the bank’s best known dealmakers. Separately, Robert Morrice, chairman of Barclay’s Asia-Pacific business, is retiring after 17 years.
Two weeks ago Barclays suffered a protest vote at its annual shareholder meeting over an increase in bonuses at its investment bank. Analysts said the bonuses were needed to avoid a “death spiral” of US staff quitting amid poaching attempts from rival banks. Mr Jenkins in under shareholder pressure to cut costs, including pay deals, and come up with a long-term strategy for its investment bank. The high-profile division has struggled to generate returns above its cost of capital. As part of the strategic review, Barclays is expected to create a “bad bank” to house non–core assets in a move designed to revive the rest of the investment bank.
The division is expected to take on large parts of the non-performing assets, including the bank’s commodities operation.
Barclays has considered selling its operations in France and Italy before but has apparently failed to find buyers. Mr Jenkins knows the bank’s continental operations well having been involved in buying its credit card operations in Portugal and Italy.
Although the divisions are not failing, Mr Jenkins is thought to have decided that their profits are too low.
Barclays declined to comment.
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The European people are losing their confidence in the 28-nation European Union (EU) with only 30 percent suggesting that their governments should remain within the bloc, an opinion poll shows.
According to a poll conducted by France’s IPSOS institute, the 30 percent also want their governments to take measures to circumscribe the union’s influence.
The pollster interviewed 12,000 people from 12 European countries (France, Britain, Germany, Italy, Spain, Sweden, Belgium, Croatia, Czech, Hungary, Poland and the Netherlands) last March. The findings were released on April 22.
Eighteen percent of the respondents want the pullout of their governments while only 13 percent favor a stronger union. In 2005, 63 percent of the Europeans favored a stronger union, but they have since thought twice due to economic crises and runaway unemployment rates.
On Monday, the European Commission warned about the continued vulnerable economic position of some European Union states, despite a slight rise in the bloc’s economic growth forecast.
The commission said that although a very modest economic recovery begins to take hold, member states such as Greece, Cyprus, Italy, Spain, Portugal and France are still in a vulnerable position.
The commission also expressed concern about the issue of banks not lending as well as record low inflation in the eurozone and the EU, which discourages firms from investing and consumers from spending.
The EC predicts an inflation rate of 0.8 percent for the eurozone in 2014 and 1 percent in the EU. Europe plunged into financial crisis in early 2008.
The worsening debt crisis forced the EU governments to adopt harsh austerity measures and tough economic reforms.
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