Barclays shares slide as merger plans stay vague

Shares in Barclays, the banking group, sank 6 per cent yesterday as the City expressed its disappointment at a lacklustre set of full-year results and the absence of positive news on merger plans.

News of a pounds 500m share buyback programme failed to cheer analysts, many of whom had been hoping for a bullish statement on future strategy.

But although Martin Taylor, Barclays' chief executive, said the case for further rationalisation was "compelling", he refused to comment specifically on the identity of possible merger partners.

One banking analyst said: "Consolidation rumours have driven this share price up, and if he [Mr Taylor] doesn't say anything positive on consolidation soon, people are going to get a bit worried."

Persistent takeover rumours - in particular, speculation about a possible link-up with NatWest - have sent Barclays' share price soaring in recent months. Since the autumn, shares have risen by more than a third. But yesterday they shed 118p to close at 1813p.

Barclays' pre-tax profit for the year to December slumped 26 per cent to pounds 1.7bn - lower than expected - prompting unfavourable comparisons with rival Lloyds TSB, which last week unveiled record 1997 profits of pounds 3.2bn.

The sell-off of parts of BZW, Barclays' former investment banking arm, was the main reason for the profit fall. Two weeks ago, the bank admitted that it would take a pounds 688m hit following the sale of its equity and corporate advisory businesses.

The City had already been told about the BZW figures, but was surprised yesterday by the size of some other costs.

The bank has set aside an additional pounds 25m to cover compensation for non- priority cases in the pensions mis-selling scandal. It also said yesterday preparations for EMU and the year 2000 would cost a total of pounds 400m.

If the UK enters EMU on a retail basis, where the currency will be used on the high street, Barclays will incur a further pounds 300m in costs as cash machines and other types of technology are changed.

Barclays took the opportunity yesterday to spell out its degree of exposure to Asia. The bank has an exposure of pounds 1.2bn to Korea, Indonesia and Thailand, 15 per cent of which is in the corporate sector. Barclays has made an additional provisions of pounds 45m to cover the increased risk of default in Asia.

When questioned about the possibility of mergers in the banking industry, Mr Taylor reiterated his view on rationalisation in the sector.

He said: "I think the arguments for banking consolidation in the next decade are absolutely compelling. There is no doubt at all that we'll see a substantial reduction in the number of international banks." Although he expected there would be cross-border mergers, "you do tend to get domestic consolidation first, for all sorts of reasons".

But Mr Taylor would not be drawn into a discussion of likely merger partners for Barclays, although he admitted "cultural incompatibility" could destroy shareholder value.

Mr Taylor also provided details of Barclays' new structure, which will come into effect on April 1. The bank is to be re-organised into four groups: Retail Financial Services, Corporate Banking, Barclays Global Investors, and Barclays Capital, the remnants of BZW.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
News
Andy Davidhazy at the beginning (left) and end (right) of his hike
video
News
Taylor Swift is applying to trademark song lyrics from 1989
people
Voices
The popularity of TV shows such as The Liver Birds encouraged Liverpudlians to exaggerate their Scouse accent
voicesWe exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor
Life and Style
Parker says: 'I once had a taster use the phrase 'smells like the sex glands of a lemming'. Who in the world can relate to that?'
food + drinkRobert Parker's 100-point scale is a benchmark of achievement for wine-makers everywhere
News
i100
  • Get to the point
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: Retirement Coordinator - Financial Services

Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...

Recruitment Genius: Annuities / Pensions Administrator

Negotiable: Recruitment Genius: You will be the first point of contact for all...

Ashdown Group: HR, Payroll & Benefits Officer - Altrincham - up to £24,000.

£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...

Ashdown Group: Learning and Development Programme Manager

£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...

Day In a Page

Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat
Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

Saudi airstrikes are fuelling the Gulf's fire

Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

The only direction Zayn could go

We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

Spells like teen spirit

A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

If fashion is a cycle, this young man knows just how to ride it

British designer Jonathan Anderson is putting his stamp on venerable house Loewe
Number plates scheme could provide a licence to offend in the land of the free

Licence to offend in the land of the free

Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

From farm to fork in Cornwall

One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

Robert Parker interview

The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
Don't believe the stereotype - or should you?

Don't believe the stereotype - or should you?

We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor
How to make your own Easter egg: Willie Harcourt-Cooze shares his chocolate recipes

How to make your own Easter egg

Willie Harcourt-Cooze talks about his love affair with 'cacao' - and creates an Easter egg especially for The Independent on Sunday
Bill Granger recipes: Our chef declares barbecue season open with his twist on a tradtional Easter Sunday lamb lunch

Bill Granger's twist on Easter Sunday lunch

Next weekend, our chef plans to return to his Aussie roots by firing up the barbecue
Joe Marler: 'It's the way I think the game should be played'

Joe Marler: 'It's the way I think the game should be played'

The England prop relives the highs and lows of last Saturday's remarkable afternoon of Six Nations rugby
Cricket World Cup 2015: Has the success of the tournament spelt the end for Test matches?

Cricket World Cup 2015

Has the success of the tournament spelt the end for Test matches?
The Last Word: Justin Gatlin knows the price of everything, the value of nothing

Michael Calvin's Last Word

Justin Gatlin knows the price of everything, the value of nothing