BZW results hit by staff costs
Wednesday 19 February 1997
Operating profits at BZW slid to pounds 204m in 1996, confirming the concerns of many analysts who had feared that heavy staff turnover at BZW, run by Bill Harrison, the recently installed chief executive, would take its toll. Despite the profits fall, however, BZW set aside an additional pounds 22m to pay bonuses last year.
Banking analysts remain worried about BZW's prospects for this year. One said that if the bank could not muster a good year in 1996 then perhaps it never would. And several analysts yesterday started to downgrade their forecasts for the whole Barclays banking group, amid concerns that City expectations had been pitched too high.
Overall, total costs at BZW rose by pounds 160m. That was much faster than income which rose by just 7 per cent in the year.
The rise in costs was even sharper in the second half. Martin Taylor, chief executive of Barclays, said costs rose 20 per cent when compared with the first half. In the second half, when most of the management changes took place, BZW produced less than pounds 50m of operating profits.
BZW's return on equity was just 8 per cent in 1996, and Mr Taylor said that would not be tolerated for long.
Of the pounds 160m increase in costs, he said pounds 120m could be attributed to payments to staff. BZW spent pounds 45m on "upgrading" - hiring and firing staff - during the year.
"This is an entirely deliberate process. What we could have done is do nothing. That would have achieved a higher profit today and a much weaker business," Mr Taylor said.
He said Barclays was committed to developing BZW into a "formidable competitor" but predicted that costs would remain high in the first half of this year, especially as BZW was due to start moving to new offices in Canary Wharf in London's Docklands in April.
The real question, he said, was when the new staff would start to generate revenue.
BZW has hired several top executives since the death of David Band, its chief executive, early last year. Mr Harrison was hired from Robert Fleming to replace Mr Band while Bob Diamond was brought in from Credit Suisse on a multi-million pound pay deal to head the markets division.
Marvel has released the first teaser trailer a week early after it leaked online
- 1 Nokia no more: Microsoft drops once-ubiquitous mobile name – in favour of its Lumia brand
- 2 Renee Zellweger on plastic surgery: 'I'm living a fulfilling life and I'm thrilled that perhaps it shows'
- 3 Banksy not arrested: Internet duped by fake report claiming artist's identity revealed
- 4 Australian café owner sparks debate after saying 'No' to having unruly children on premises
- 5 Couple die within 28 hours of each other after being married for 73 years
Ottawa shooting: Canadian soldier dies after being shot at National War Memorial – with one gunman killed inside parliament
Renee Zellweger on plastic surgery: 'I'm living a fulfilling life and I'm thrilled that perhaps it shows'
Isis releases first video showing the stoning of woman accused of committing adultery as her father shouts 'don't call me Dad'
Banksy not arrested: Internet duped by fake report claiming artist's identity revealed
Diwali 2014: What is the festival of lights and how is it celebrated around the world?
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Of course, teenage girls need role models – but not like beauty vlogger Zoella
Support for EU membership 'at highest level since 1991' with most Brits wanting to stay 'in'
Residents should throw a street party and mix with immigrant neighbours, councils told
Russell Brand threatened with arrest after filming outside Fox News headquarters
London bus driver 'kicks gay couple off for kissing'
iJobs Money & Business
£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...
£18000 - £23000 per annum + Commission: SThree: The SThree group is a world le...
£18000 - £23000 per annum + Comission: SThree: The SThree group is a world lea...
£20000 - £25000 per annum + OTE £Competitive: SThree: SThree Group and have be...