Barclays takes pounds 688m hit from BZW sell-off

Barclays yesterday revealed it would suffer a pounds 688m hit following last year's decision to sell parts of BZW, its investment banking arm.

Following City pressure to spell out the financial implications of the deal, the bank said its 1997 figures, due for release on 17 February, would include a pounds 340m restructuring charge and a pounds 129m goodwill charge. To the City's surprise, Barclays also revealed the businesses made an operating loss of pounds 219m last year. This was primarily due to "uncertainty surrounding their future and difficult market conditions", the bank said yesterday.

Martin Taylor, Barclays' chief executive, said: "We made a strategic decision to redefine our investment banking business in the autumn, because continuing to invest in parts of the business no longer made commercial sense for us."

Last November, the bank announced it was selling its UK and European equities and corporate advisory businesses to Credit Suisse First Boston (CSFB), the Swiss-American investment bank, for pounds 100m, pounds 50m less than book value. Later that month, it also announced it was closing its Japanese equities business, after failing to find a buyer, and, in December, Barclays sold its Australasian investment banking activities to ABN Amro, the Dutch bank for pounds 70m.

This year's announcement that CSFB was to buy some of Barclays' Asian equities businesses marked the end of the sale process. The bank's remaining Asian equities businesses are to be closed, with the possible exception of the Philippines, where Barclays still hopes to negotiate a sale.

Kathryn Newton, banking analyst at UBS, said: "The charges going through the profit and loss account [the pounds 340m restructuring charge and the pounds 129m goodwill charge] were slightly more than expected, but did not come as an enormous surprise. But the terrible trading loss [the operating loss of pounds 219m] was a big surprise."

The City was pleased Mr Taylor had moved to end uncertainty over the cost of the BZW sale, and Barclays' shares closed up 41p at 1886p.

National Westminster Bank yesterday moved to kick-start its troubled UK corporate advisory business by granting the unit more autonomy. NatWest Group is to embark on a "partnership arrangement" with NatWest Markets Corporate Advisory (NWMCA). NWMCA, which incorporates Hambro Magan, the corporate advisory business bought by NatWest in 1996, is to be renamed and will have its own management board. NWMCA employees will also benefit from a separate profit pool.