Barclays reels under pounds 1bn of bad debts

SIR JOHN QUINTON, chairman of Barclays Bank, yesterday warned that the recession could last two more years, as his bank reported a dramatic fall in half-year profits and more than pounds 1bn in bad-debt provisions.

Pre-tax profits at Barclays slumped to pounds 51m, an 87 per cent decline from pounds 378m in the same period last year.

The record pounds 1.07bn bad-debt charge, which includes heavy provisions for big-name property and construction firms, in effect wiped out most of Barclays' pounds 1.17bn operating profits.

Sir John called the results 'very disappointing'. He said: 'They reflect the high level of business failure and bad debt in the UK, and the accompanying plunge in property values, the severity of which was largely unforeseen.'

The economies of many other countries where Barclays operated were also weak, he said. Provisions in the second half of 1992 would remain high.

Barclays had to dip into reserves in order to maintain the interim dividend at 9.15p.

The pounds 1.07bn set aside for bad and doubtful debts compares with pounds 799m a year earlier. UK provisions accounted for the lion's share of bad debts, pounds 658m against pounds 436m a year ago.

Sir John admitted to bad lending decisions. 'Thirty to forty per cent of our bad debts come from poor lending, and the rest is from the recession,' he said.

Two corporate customers, thought to be the property developers Olympia & York and Heron, accounted for pounds 100m of provisions. Barclays is the biggest UK lender to City property firms. But provisions in retail and personal sectors also mounted.

Sir John explained that Barclays had halted new property lending in 1988 and focused on existing loans to 'sound' property companies. But as the recession carried on and property values fell, those companies continually drew on existing credit lines with Barclays and got into difficulties.

For the past 18 months, the bank has also been incurring pounds 1m per day in provisions on loans to small businesses.

Barclays also took an exceptional pounds 82m provision related to the sale of Barclays Bank of New York and other businesses.

Andrew Buxton, who takes over as executive chairman in December, denied suggestions that institutional shareholders were pressuring the bank to split the roles of chairman and chief executive.

One of the few positive features was a 6 per cent rise in income, which helped push operating profits up by 16 per cent. Costs were also held steady.

The UK bank made a pounds 79m pre-tax loss, compared with an pounds 80m profit a year ago. The plastic card division doubled profits to pounds 51m. Other UK operations lost pounds 102m. Profits in BZW, the investment bank restructured to include treasury and other businesses, fell 37 per cent to pounds 99m.

----------------------------------------------------------------- Table: HOW THE BANKS COMPARE ----------------------------------------------------------------- Half-year to June Pre-tax Provisions Cost/income profit (pounds m) ratio % (pounds m) Barclays 51 1,072 63.9 NatWest 211 864 65.9 HSBC/Midland 89 355 72.9 Abbey National 270 138 45.2 Lloyds 369 329 63.0 -----------------------------------------------------------------

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Mortgage Advisor - OTE £95,000

£40000 - £95000 per annum: Recruitment Genius: This is an exciting opportunity...

SThree: Trainee Recruitment Consultant

competitive: SThree: Are you passionate about sales?Do you have a keen interes...

Recruitment Genius: Loan Adviser - OTE £30,000

£17000 - £30000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Day In a Page

Isis in Syria: Influential tribal leaders hold secret talks with Western powers and Gulf states over possibility of mobilising against militants

Tribal gathering

Influential clans in Syria have held secret talks with Western powers and Gulf states over the possibility of mobilising against Isis. But they are determined not to be pitted against each other
Gaza, a year on from Operation Protective Edge: A growing population and a compromised and depleted aquifer leaves water in scarce supply for Palestinians

Gaza, a year on from Operation Protective Edge

A growing population and a compromised and depleted aquifer leaves water in scarce supply for Palestinians
Dozens of politicians, bureaucrats and businessmen linked to Indian bribery scandal die mysteriously

Illnesses, car crashes and suicides

Dozens of politicians, bureaucrats and businessmen linked to Indian bribery scandal die mysteriously
Srebrenica 20 years after the genocide: Why the survivors need closure

Bosnia's genocide, 20 years on

No-one is admitting where the bodies are buried - literally and metaphorically
How Comic-Con can make or break a movie: From Batman vs Superman to Star Wars: Episode VII

Power of the geek Gods

Each year at Comic-Con in San Diego, Hollywood bosses nervously present blockbusters to the hallowed crowd. It can make or break a movie
What do strawberries and cream have to do with tennis?

Perfect match

What do strawberries and cream have to do with tennis?
10 best trays

Get carried away with 10 best trays

Serve with ceremony on a tray chic carrier
Wimbledon 2015: Team Murray firing on all cylinders for SW19 title assault

Team Murray firing on all cylinders for title assault

Coaches Amélie Mauresmo and Jonas Bjorkman aiming to make Scot Wimbledon champion again
Wimbledon 2015: Nick Bollettieri - Vasek Pospisil must ignore tiredness and tell himself: I'm in the quarter-final, baby!

Nick Bollettieri's Wimbledon Files

Vasek Pospisil must ignore tiredness and tell himself: I'm in the quarter-final, baby!
Ashes 2015: Angus Fraser's top 10 moments from previous series'

Angus Fraser's top 10 Ashes moments

He played in five series against Australia and covered more as a newspaper correspondent. From Waugh to Warne and Hick to Headley, here are his highlights
Greece debt crisis: EU 'family' needs to forgive rather than punish an impoverished state

EU 'family' needs to forgive rather than punish an impoverished state

An outbreak of malaria in Greece four years ago helps us understand the crisis, says Robert Fisk
Gaza, a year on from Operation Protective Edge: The traumatised kibbutz on Israel's front line, still recovering from last summer's war with Hamas

Gaza, a year on from Operation Protective Edge

The traumatised kibbutz on Israel's front line, still recovering from last summer's war with Hamas
How to survive electrical storms: What are the chances of being hit by lightning?

Heavy weather

What are the chances of being hit by lightning?
World Bodypainting Festival 2015: Bizarre and brilliant photos celebrate 'the body as art'

World Bodypainting Festival 2015

Bizarre and brilliant photos celebrate 'the body as art'
alt-j: A private jet, a Mercury Prize and Latitude headliners

Don't call us nerds

Craig Mclean meets alt-j - the math-folk act who are flying high