Counterparties: A minimal vision at Barclays
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At the recently revamped house of Barclays, the inspiration for the full-year earnings announcement was minimalism: 3,700 fewer employees, $2.6 billion in cut costs, and promises to reduce the size of what the Guardian called its “industrial scale” tax avoidance business. There was, however, an inevitable hangover from the the prior regime: a $1.6 billion loss in fiscal-year 2012. That came thanks to the $1.6 billion set aside to compensate clients for mis-selling derivatives and loan insurance.
Extolling the virtues of virtue appears to be key to the new identity. New CEO Anthony Jenkins described the results of a strategic review, which was sparked by Barclays role in the Libor-fixing scandal. Business units, Jenkins said, will be evaluated, in part, on “their strategic attractiveness, including their impact on Barclays reputation”.
In an echo of Deutsche Bank’s Strategy 2015+, Jenkins said that it would take until 2015 to fully implement this new vision, which includes the layoffs and cost cutting measures mentioned above, reducing risk-weighted assets, and also managing to somehow increase both dividends and Tier 1 capital at the same time. Moreover, all this will be done while maintaining current return on equity of 11.5%.
As Barclays adopts a new, more austere formality, it remains unclear if customers who previously came to the bank for its unique brand of actuarial insouciance will remain loyal to the brand. The FT points out that “at its peak, Barclays’ controversial tax structuring unit… contributed the bulk of the group’s investment banking revenue”. Management says it intends to fill the gaping hole in its revenues by expanding its global customer base and growing the wealth management business. That’s not going to be easy, but thus far, investors’ first impression have been positive: Barclays shares are at their highest level in almost two years. — Ben Walsh
On to today’s links:
The “most overlooked variable” in debt reduction? Economic growth – Jared Bernstein
Awesome graphic showing which countries the US trades with – Quartz
Ezra Klein has “fuck you traffic”, and some angst about being profiled by the New Republic – Julia Ioffe
Don’t do press – The Awl