Barclays declares war on costs as profits slip to pounds 1.9bn
Wednesday 17 February 1999
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."
Times are so tough in Italy that Mafiosi are considering getting jobs
The man they forgot to lock up: Mike Anderson was sentenced to 13 years in jail, but the police never came
Unbeliebable: The White House offers 'no comment' to anti-Justin Bieber petition
Loch Ness Monster found on Apple Maps?
South Korea ferry disaster: Families watch as remains of Sewol victims returned to shore
The food poverty scandal that shames Britain: Nearly 1m people rely on handouts to eat – and benefit reforms may be to blame
Scottish independence: It is the English who should be on their knees, begging the Scots to vote ‘No’
'Sinful': Video of British Muslims dancing to Pharrell Williams's hit Happy comes under attack
An open letter to Nigel Farage: you may smile, but I am not seduced
Nigel Farage: I’m taking on the status quo, and the Establishment’s fighting back
Abdullah Deghayes: My son was the martyr of a just cause, says father of British teenager killed in Syria conflict
- 1 Disabled people are trapped in assessment 'nightmare' by PIP benefits regime, says Dr Stephen Duckworth
- 2 A bottle of wine a day is not bad for you and abstaining is worse than drinking, scientist claims
- 3 Queen turns 88: David Bailey captures another side of the Queen in birthday portrait
- 4 Loch Ness Monster found on Apple Maps?
- 5 Criminals ‘using unmanned drones and infrared cameras to find illegal cannabis farms’ – and then steal from the growers
iJobs Money & Business
Negotiable: Harrington Starr: Database Team Lead ( Leadership, Sybase, Compute...
£40000 - £50000 per annum + Bonus+Benefits+Package: Harrington Starr: C#.NET D...
£25000 - £35000 per annum + Bonus+Benefits+Package: Harrington Starr: VB.NET S...
£45000 - £55000 per annum + Bonus and Benefits: Harrington Starr: Trade Suppor...