Counterparties: A minimal vision at Barclays

By Ben Walsh
February 12, 2013

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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:

Alpha
Your new landlord works on Wall Street – David Dayen

Nepotism
Thoroughly depressing data on how your last name can affect your income – Economist

Hope/Change/Etc.
“Obama is likely to promote the same goals for the country that he did in last year’s address” – Zachary Goldfarb

New Normal
The health care market may be slowly beginning to change for the better – Annie Lowrey

Wonks
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

Charts
Inverse correlation of the day: AOL vs Netflix subscribers – Dan Frommer

Facebook
Why I’m unfriending you on Facebook – Julia Angwin

Apple
“People buy cheap tablets as presents. When they are shopping for themselves, they tend to buy iPads.” – Business Insider

Overwrought Farewells
“Do not waste my death” – Telegraph

Be Afraid
Good morning! Everything is poison! – Young Australian Skeptics

Ouch
Esquire article wrongly claims SEAL who killed Bin Laden is denied healthcare – Megan McCloskey

6 comments

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While it goes against the grain to defend something like Esquire, in this case it is the lesser of evils. It is true that Bronstein emitted the hyperbolic “Nothing. No pension, no health care, and no protection for himself or his family” quotation, he goes on to contradict this, saying that the Shooter himself is still eligible for care (though his family is not) and that he has disability claims working their way through the system. It is also Bronstein who notes that you have to serve 20 to get a pension. All of McCloskey’s substantive points are already made in the piece she criticizes – she is zero value added. With a little integrity alloyed to some 3rd-grade reading skills, she could easily have proved herself wrong. As Felix could have, had he troubled to read the original piece. One concludes, then that McCloskey is sleazy and unprincipled defender of the administration, and that Felix by his indolence is her unwitting ally.

Posted by Greycap | Report as abusive

Greycap – so focus, tone, implicit arguments, subtle shading, and misleading conclusions served by the above decisions don’t exist in an agenda-driven piece of reporting?

They are both right, they are both wrong, but McCloskey isn’t out of line to say “you clearly meant THIS, and THIS isn’t true, even if you buried some qualifications in paragraph 27.” And Esquire isn’t right to defend “well, yeah the entire article is about SEALS not getting post-retirement healthcare, but although technically they can, your argument is really that I didn’t write about ineffective bureaucracy at the VA, and since that isn’t valid criticism to an article, shut up about my misleading paragraphs.”

With a little integrity, Esquire could have not intentionally mislead the reader.

Posted by SteveHamlin | Report as abusive

To Felix and all web-savvy commenters,

I have a problem.

I understand that all the regional Fed presidents have signed a letter to the FSOC pressing for money market fund reform. Unfortunately, I’m getting an error message this morning whenever I try to get to the actual letter.

The letter is referenced here for example:

http://www.streetinsider.com/Fed/UPDATE% 3A+All+Fed+Presidents+Support+MMF+Reform %2C+Send+Letter+to+FSOC/8085512.html

But when I try to follow the link Street Insider has provided to the “full letter” I get:

“Internet Explorer cannot display the webpage.”

Can anyone get me to a URL for that letter that IS working?

Posted by Christofurio | Report as abusive

Please disregard previous message. I don’t know what the prob was this morning, but I’m clicking through to the relevant Boston Fed page now.

http://www.bostonfed.org/news/press/2013  /pr021213-letter.pdf

Tx.

Posted by Christofurio | Report as abusive

That Business Insider piece is amazingly bad. They are arguing that Apple iPad profits will be coming under financial pressure as the iPad loses market share. That’s like arguing that there is no point in owning a Van Gogh because they have almost no market share in the painted wall hangings market. There isn’t an absolute number in the piece. if the market is growing, Apple can still increase profitability even if it does lose market share. Either someone failed 3rd grade math or is being deliberately ingenuous. I suspect the former.

Posted by Kaleberg | Report as abusive

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