Barclays issued a blunt complaint about the spiralling costs of government regulation yesterday even as it reported annual pre-tax profits up 9 per cent at £3.6bn and offered an upbeat assessment of the UK economy.
"We are in an era of escalating regulation, often as a reaction to sudden or unexpected events," Sir Peter Middleton, the bank's chairman, said. "We must avoid a regime that simply increases the costs of doing business, which ultimately leads to higher prices."
Sir Peter said customers had complained that new regulations to curb money laundering in the wake of 11 September were making it harder to open accounts.
The Financial Services Authority countered: "For our part, we aim to ensure the risks don't become reality. We do cost benefit analyses of any proposed changes."
The UK banking sector is still awaiting the findings of a Competition Commission report on the market for small business banking services.
However, the City was more concerned about Barclays' failure to control its operating costs, which rose 8 per cent to £6.1bn. There were also concerns at the bank's projected bad debt charge for this year of £1.25bn. The shares fell 2 per cent to 2,170p.
Barclays' performance last year was driven mainly by an 18 per cent increase in profits from personal banking, to £498m, and a 20 per cent increase in profits from Barclaycard, to £555m. Barclays Capital also grew strongly, contributing to the increase in overall costs.
Provisions against bad debts climbed 35 per cent to £1.15bn, reflecting a handful of recent "high profile" company collapses, assumed to be Enron and Global Crossing.
Matt Barrett, the chief executive, said he was "cautiously optimistic" about 2002 even though high levels of household debt, at 20 per cent above late 1980s level, suggested a need for caution. "There's good capacity [for borrowers] to absorb higher [interest] rates [but] at 7 or 8 per cent I would get worried."
A key element of Barclays' growth strategy was a step change in its European presence, in particular in wealth management and asset gathering. But Mr Barrett moved to quell investor fears that he might make an ill-judged acquisition. "I am confident that if something passes our own demanding screens, it will pass muster with the market," he said.Reuse content