Speaking as the group reported a pre-tax profit of pounds 1.92bn, roughly in line with what the market was told to expect last November, Sir Peter highlighted the 5 per cent rise in costs last year as evidence of where the bank needed to turn its attention now it had dealt with the problems elsewhere in the group.
Sir Peter said that there "is substantial opportunity to reduce costs over the next three years," adding that the 15 per cent savings announced at Barclaycard last September showed what could be done.
Filling in the details of both the size and scope of the savings will be the job of Mike O'Neill, the new chief executive, who takes the reins next month.
Sir Peter said the plan is to give more details at the half-year stage. He also warned the City to expect "an exceptional charge for cost reduction purposes," adding that retail financial services and corporate banking the areas where the axe was most likely to fall.
In the meantime, he said, Barclays' costs will be held at 1998 levels as a "payment on account".
Some of the rise in costs came as a result of the bank'spounds 160m total expenditure on both the euro conversion and the year 2000 problem. These costs are budgeted to fall to pounds 120m this year.
However, Sir Peter admitted that the focus last year had been on growing the business rather than containing costs, and with the economy's downturn, the emphasis had to shift.
The tough talk from Sir Peter provided further cheer to the City where the bank's shares have soared by nearly pounds 4 since the appointment of the new chief executive was announced.
Barclays' shares closed up 102p at 1692p, brushing aside what would in normal circumstances have been seen as a disappointing set of results.
The group also announced a 16 per cent increase in dividend to 43p and pledged to maintain its share buyback programme at the current level of pounds 500m a year for 1999. Sir Peter said that following the reorganisation of the business into four key divisions the bank now had the structure it wanted.
He insisted that as far as mergers were concerned, the group had "nothing on the stocks".
He said that the group would look at anything which was consistent with the strategy but was not "mesmerised" by the idea of a merger, adding: "We are interested in both the UK and abroad."
Sir Peter said that Barclays Capital, the bond-broking division which lost pounds 265m in last August's financial turmoil, had exited the businesses that caused the problems and was now an integral part of the group.
He said that at Barclays Capital he expected this year to see a positive sign where there is a negative sign now.
The operation has pulled out of proprietary trading and reduced the risk profile of the business.
"Barclays Capital is a key part of the offering to large corporates," Sir Peter said. "It now has no businesses that do not support client businesses."