Barclays boss outlines bank's strategy

12th Feb 2013 10:53

Barclays will focus on becoming the "Go-To" bank but it is realistic about reaching its goals following a challenging year, Chief Executive Officer Antony Jenkins said Tuesday.The Barclays boss outlined the bank's highly-anticipated strategic review in a press conference after the 2012 annual results were revealed along with plans to cut 3,700 jobs from the 140,000-strong workforce as part of a major restructuring.He has been working to salvage the bank's image in the wake of a scandal over LIBOR rigging and mis-selling of payment protection insurance. The bank has agreed to pay a £290m fine to UK and US regulators. Jenkins, successor to former boss Bob Diamond who stepped down amid the lawsuit in August, said the company had a long way to go before recovering from the mess"Barclays will not become the go-to bank overnight," he said, adding that he expects to reach a return on equity above the cost of equity in 2016. "This may seem long time to some of you but it's realistic."The business posted a 26% increase to £7.05bn in adjusted profits before tax for the year ended December 31st, 2012, with an improvement of 46% in Corporate and Investment Banking and 52% in Wealth and Investment Management. The results fell slightly short of market expectations of £7.07bn. Statutory profit before tax decreased to £246m, compared to £5.9bn a year ago. The bank said it reflected a £4.6bn own credit charge and provisions of £1.6bn and £850m for payment protection insurance and interest rate hedging products redress, respectively. Revenues beat the £27.8bn forecast, climbing 2.0% to £29.04bn for the year despite challenging economic conditions, low interest rates and non-recurrence of gains from the disposal of hedging instruments in 2011 of £1.0bn. Adjusted return on average shareholders' equity rose to 7.8% compared to 6.6% in the previous year. Dividend per share rose to 6.5p, up from 6.0p in 2011 and marginally above the 6.45p estimate. Jenkins identified the following as the most important issues facing the lender: the macroeconomic environment, market regulations, any failure to execute its plans and the legacy issues in relation to on-going litigation over the LIBOR affair."We've had to face facts and not shy away from the challenges," he said. Of note, he also indicated that the transition will be costly but lower than current market estimates. In order to achieve its aims, Jenkins said the bank will place emphasis on its culture, rewards, control and costs. The boss will be ruthless in reducing any units that fail to perform but said he was confident the group would meet its resolution targets. He also confirmed Barclays would be closing its Structured Capital Markets business, which helps clients avoid tax. He gave a cost reduction target of £1.7bn by 2015 as the group streamlines business.It comes along with job cuts including 1,800 in the Corporate and Investment Bank division and 1,900 in Europe Retail and Business Banking which will result in a restructuring charge of about £500m during the first quarter of this year. Earlier, outgoing Financial Director Chris Lucas said 1,600 of the 1,800 redundancies of the bank's investment arm had already been made. Lucus has decided to retire but remain in his role until a successor takes over. He is currently under investigation by the Financial Services Authority for the way disclosures were made during the 2008 fundraising that helped the bank avoid a taxpayer bailout.The market reacted positively to Tuesday's annual results and strategic review with shares rising 7.16% to 323.10p at 14:30. RD