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| Barclays makes further provision for scandals and cuts costs | Barclays makes further provision for scandals and cuts costs |
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| The temporary head of Barclays has warned that jobs are on the line as the bank embarks on a plan to cut costs and accelerate the disposal of risky operations. | The temporary head of Barclays has warned that jobs are on the line as the bank embarks on a plan to cut costs and accelerate the disposal of risky operations. |
| John McFarlane attempted to stamp his authority on the bank just weeks after stepping up to executive chairman after the axing of chief executive Antony Jenkins. | John McFarlane attempted to stamp his authority on the bank just weeks after stepping up to executive chairman after the axing of chief executive Antony Jenkins. |
| Speaking as Barclays set aside £1.8bn in the first half of the year to compensate customers for a string of mis-selling scandals and fines, McFarlane said he was pleased with the performance of the troublesome investment banking arm but conceded the unit could not compete with Wall Street rivals as a global player. | Speaking as Barclays set aside £1.8bn in the first half of the year to compensate customers for a string of mis-selling scandals and fines, McFarlane said he was pleased with the performance of the troublesome investment banking arm but conceded the unit could not compete with Wall Street rivals as a global player. |
| He also appeared to question the current structure of the bank, which unites high street banking, credit cards and investment banking, as he discussed the bank’s languishing share price. “Is there a conglomerate discount? The answer frankly is that we cannot validate this because our businesses are not all performing,” he said. | He also appeared to question the current structure of the bank, which unites high street banking, credit cards and investment banking, as he discussed the bank’s languishing share price. “Is there a conglomerate discount? The answer frankly is that we cannot validate this because our businesses are not all performing,” he said. |
| McFarlane, promoted to stand-in boss only two months after becoming non-executive chairman, congratulated Jenkins after the bank reported first-half profits up 25% to £3.1bn. Jenkins was ousted this month after losing the confidence of the board. The £1.8bn provision includes a further £600m for the payment protection insurance mis-selling scandal and £250m to compensate customers with packaged bank accounts that had other products, such as insurance, attached to them. Fines for rigging foreign exchange markets also dented the results. | McFarlane, promoted to stand-in boss only two months after becoming non-executive chairman, congratulated Jenkins after the bank reported first-half profits up 25% to £3.1bn. Jenkins was ousted this month after losing the confidence of the board. The £1.8bn provision includes a further £600m for the payment protection insurance mis-selling scandal and £250m to compensate customers with packaged bank accounts that had other products, such as insurance, attached to them. Fines for rigging foreign exchange markets also dented the results. |
| McFarlane, who is keen to bolster returns for shareholders, surprised analysts by saying he would “not be as ambitious with dividends” for this year as his predecessor. | McFarlane, who is keen to bolster returns for shareholders, surprised analysts by saying he would “not be as ambitious with dividends” for this year as his predecessor. |
| The payout to shareholders will be held steady at 6.5p but McFarlane said: “Accelerating the dividend is probably the single biggest priority we’ve got.” | The payout to shareholders will be held steady at 6.5p but McFarlane said: “Accelerating the dividend is probably the single biggest priority we’ve got.” |
| The shares, up 10% since McFarlane stepped in three weeks ago, closed up 1.5% at 284p. | The shares, up 10% since McFarlane stepped in three weeks ago, closed up 1.5% at 284p. |
| The executive chairman is speeding up other plans put in place by Jenkins, cutting the non-core division to £20bn by 2017, faster than the target of £50bn by 2016.. The cost-income ratio – a measure of efficiency – is to fall to the “mid-50s” from 70% now – sparking questions about further job cuts on top of the 19,000 announced year ago. McFarlane said no decision had been made but, added: “The company will get smaller in terms of headcount.” The bank employs 132,000 people worldwide. | The executive chairman is speeding up other plans put in place by Jenkins, cutting the non-core division to £20bn by 2017, faster than the target of £50bn by 2016.. The cost-income ratio – a measure of efficiency – is to fall to the “mid-50s” from 70% now – sparking questions about further job cuts on top of the 19,000 announced year ago. McFarlane said no decision had been made but, added: “The company will get smaller in terms of headcount.” The bank employs 132,000 people worldwide. |
| There was better news for users of high street branches after 100 were closed last year, taking the UK network to 1,448. McFarlane said he intended to slow closures. “I am particularly hostile to closing the last bank in town,” he said. | |
| McFarlane said there would be “increased focus on our core franchises: what we are good at, where we are good at it and what is financially compelling to us.” | McFarlane said there would be “increased focus on our core franchises: what we are good at, where we are good at it and what is financially compelling to us.” |
| “That means aligning our effort and investment behind our key franchises of UK personal and commercial banking, investment banking in Europe and the US, our cards business, and on Africa. We will also act quickly to curtail activity which is marginal or which will not deliver the return on equity we require,” he said. | “That means aligning our effort and investment behind our key franchises of UK personal and commercial banking, investment banking in Europe and the US, our cards business, and on Africa. We will also act quickly to curtail activity which is marginal or which will not deliver the return on equity we require,” he said. |
| Much of the focus was on his views about the investment bank – the powerhouse of the business until the 2012 Libor rigging scandal forced a rethink of the operation . Its profit rose 36%, to £1.4bn, faster than any other division. | Much of the focus was on his views about the investment bank – the powerhouse of the business until the 2012 Libor rigging scandal forced a rethink of the operation . Its profit rose 36%, to £1.4bn, faster than any other division. |
| “There is an issue about Europe needing an investment banking champion, we don’t really see that as our obligation. If we were able to do that, that would be really nice to do,” he said, although added that the US was more important for Barclays investment banking ambitions. | “There is an issue about Europe needing an investment banking champion, we don’t really see that as our obligation. If we were able to do that, that would be really nice to do,” he said, although added that the US was more important for Barclays investment banking ambitions. |
| He also said Barclays intended to comply with the UK requirement to erect a ringfence between its high street and investment banking operations by applying for a new banking licence from the Bank of England. | He also said Barclays intended to comply with the UK requirement to erect a ringfence between its high street and investment banking operations by applying for a new banking licence from the Bank of England. |
| McFarlane has a reputation in the City for bolstering share prices after he temporarily took the helm of Aviva in 2012 when Andrew Moss was ousted as chief executive. A Scot who has also had a lengthy career in Australia, McFarlane described Barclays as “cumbersome”. | McFarlane has a reputation in the City for bolstering share prices after he temporarily took the helm of Aviva in 2012 when Andrew Moss was ousted as chief executive. A Scot who has also had a lengthy career in Australia, McFarlane described Barclays as “cumbersome”. |
| “We could sharpen up the growth ... we need to sharpen up the productivity of the company, we need to sharpen up the decision making,” he said. | “We could sharpen up the growth ... we need to sharpen up the productivity of the company, we need to sharpen up the decision making,” he said. |
| He said the bank had “broken the back” of the cultural changes that it has committed to implementing since the £290m fine for rigging Libor in 2012. However, the results contained pages of legal warnings about potential penalties related to interest rate rigging and other benchmarks. It also repeated that it was fighting a £50m fine from City regulators related to fundraising from Middle Eastern investors in 2008, as well as facing an investigation by the Serious Fraud Office and possible civil action over the same matter. | He said the bank had “broken the back” of the cultural changes that it has committed to implementing since the £290m fine for rigging Libor in 2012. However, the results contained pages of legal warnings about potential penalties related to interest rate rigging and other benchmarks. It also repeated that it was fighting a £50m fine from City regulators related to fundraising from Middle Eastern investors in 2008, as well as facing an investigation by the Serious Fraud Office and possible civil action over the same matter. |
| The Barclaycard business reported record profits of £795m and was being primed for growth in the US. The high street operations reported a 4% rise in profits to £1.5bn. | The Barclaycard business reported record profits of £795m and was being primed for growth in the US. The high street operations reported a 4% rise in profits to £1.5bn. |
| The successor for Jenkins looks likely to be external after McFarlane said there was “probably more fertile ground internationally rather than domestically”. The bank’s finance director, Tushar Morzaria, refused to comment on whether he was a candidate to replace Jenkins. | The successor for Jenkins looks likely to be external after McFarlane said there was “probably more fertile ground internationally rather than domestically”. The bank’s finance director, Tushar Morzaria, refused to comment on whether he was a candidate to replace Jenkins. |