Barclays boss calls for £20 billion in cuts to £15 billion fund
Barclays has raised the prospect of a £20bn capital raise and an £8bn reduction in the size of the investment bank’s fund to help reduce its £15bn fund capital shortfall.
The announcement comes amid a financial crisis which has left Barclays with a £7.7bn capital shortfall and a shortfall of £8.6bn in the value of its investment banking assets.
“Our business is under strain,” said Barclays chief executive, Jes Staley.
“Our financial performance is below the industry average.
Our assets are below the average for large banks, and our risk-weighted capital ratio is below that of most other large banks.”
Staley said the bank was also in talks with other investors, but did not elaborate on what those talks were.
The bank also said it would take an extra £2.3bn in cash this year, a £2bn dividend and an extra cash infusion of £10bn in 2018.
Staley also said that Barclays was “investing aggressively” in the UK.
“This means that we’re investing aggressively to invest in our business in the United Kingdom, where we have a strong base of strong customers, and we’re making a big bet that this investment will continue,” he said.
“We are investing £2 billion more in the capital of our investment bank in the next year, and a further £3 billion in the business in 2020, to support our long-term growth.”
Stale capital return Barclays said that the UK investment bank had outperformed the industry in both the past two years, and was outperforming the broader market.
“The UK has emerged as the leader in financial innovation, and Barclays’ strategy is set to continue to deliver a strong return for shareholders,” Staley said.
“The UK investment banking business is set for a massive investment of more than £30bn this year and more than that in the 2020 financial year.”
Investment bank chief in talks to raise £15billionA number of investment banks have announced plans to slash the size and number of their investment banks in recent months.
Barclays, which is in the process of raising a £15b capital raise, has said it will make the decision on whether to continue with the restructuring plan in due course.
Stale return and capital boostA recent survey by the Financial Conduct Authority (FCA) found that investors are looking for more transparency in the investment banking industry, as well as lower costs.
A recent survey also found that investment banks are facing a large funding shortfall and that there is a lack of liquidity.
Barclays is the biggest shareholder in Lloyds Banking Group, which has about $15.5bn in annual revenue, and is also in negotiations to buy the remaining stake in the European investment bank Standard Chartered.