Barclays has warned that new banking reforms could reduce the volume and increase the cost of the credit that is essential to stimulate economic growth. The banking group also announced yesterday it would cut about 3,000 jobs this year and reported a smaller-than-expected 33 per cent slump in first-half profits.
Bob Diamond, Barclays chief executive, said uncertainty ahead of the final report of Sir John Vickers Independent Commission on Banking (ICB) next month was forcing banks to carry "excess capital... which is certainly impacting on the availability and price of credit".
Mr Diamond refused to rule out the possibility that stringent regulations requiring banks to "ringfence" their retail operations from risky investment banking operations and to hold more capital – measures suggested in the ICB's preliminary report in April – could lead to additional redundancies in the UK.
Mr Diamond said Barclays opposed any kind of ringfence but that "some kinds are better than others", adding that it would be inappropriate to comment on any implications for UK jobs until the ICB fleshes out the details of its earlier recommendations in its report on September 12.
If British businesses are to start investing the cash they have been hoarding they need more confidence in the UK economy and "certainty around banking regulation" has a key role to play here, Mr Diamond said.
His comments echo those of his counterpart at HSBC, who on Monday announced plans to cut 30,000 jobs over the next three years and warned that redundancies could be even higher if the UK adopted a hardline approach to banking reform.
Banks are opposed to ringfencing their retail operations because of the costs associated with administration and holding more capital.
Barclays said it had already cut 1,400 positions this year, including 700 staff at BarCap and 500 at its UK consumer unit. The group expects to eliminate a total of about 3,000 jobs in 2011, representing about 2 per cent of its 146,100 global workforce. Mr Diamond would not give any indication of where the redundancies would fall, saying instead that they would be across the board. However, he conceded that some of Barclays' 56,900 staff in the UK would be affected, though Spain is expected to suffer disproportionately, since Barclays plans to cut its branch network there by a fifth.
Barclays met its business lending targets agreed with the Government under the Project Merlin initiative. The bank lent £20bn to businesses in the period, including £7bn to small businesses, and said it was on course to extend a total of £40bn of loans over the year.
This contrasts to HSBC, which narrowly missed its small business lending target in the first half, though it exceeded its overall target.
Mr Diamond was speaking as Barclays reported a £2.6bn pre-tax profit for the six months to 30 June, dragged down by a previously announced £1bn provision for compensating customers mis-sold payment protection insurance (PPI).
When this is stripped out, the group reported a 24 per cent increase in pre-tax profits to £3.68bn, helped by a 24 per cent fall in impairment charges relating to bad loans to £1.83bn. Pre-tax profits at the Barclays Capital investment banking division slumped by 24 per cent to £2.3bn, as the European and US debt crises dragged down revenues from fixed income and commodities trading, but still accounted for the bulk of the group's profits.