Barclays' chief executive, Bob Diamond, yesterday insisted the bank would hit its profitability target despite the slowing economy and extra costs imposed by the Independent Commission on Banking (ICB).
In his first public comments on shareholder returns since the ICB reported last month, Mr Diamond told a banking conference: "We set a target in February to generate a return on equity of 13 per cent by 2013. After the Independent Commission on Banking report, we reiterate that target."
Members of the commission have argued that the days of mid-teen returns for banks were over and that investors would have to get used to lower but more stable earnings.
Mr Diamond, a fierce critic of the ICB's proposed ring-fencing of retail and investment banking, said yesterday that the extra flexibility and time allowed by the ICB had made the reforms more palatable.
However, a fund manager said Mr Diamond's target for returns was "just not credible" with Western economies heading back into recession.
As fears about the impact on banks of the eurozone crisis hit markets again, Mr Diamond said Barclays' capital and liquidity positions were "rock solid" and that the bank was confident about its holdings of eurozone bonds. He said Barclays' exposure to Greece was "minimal" and that its positions in these markets were "not speculative".
His comments did not stop Barclays' shares dropping 7.6 per cent to 144.35p, the second-biggest decline on the FTSE 100 index.
Mr Diamond called on investors to back Barclays and other strong UK banks after the recent battering of their share prices.
"The valuations of large, well-capitalised UK-headquartered banks have been discounted due to uncertainty in recent times but I believe it may now be time to look at these banks in a new light," he said.
Royal Bank of Scotland's Stephen Hester, told the conference the bank's 15 per cent shareholder return target was "under review" in light of regulatory and market strain.
RBS's chief executive said the bank, which has already cut thousands of jobs, would have a "heightened focus" on costs with economic clouds looming. RBS shares fell 4.2 per cent to 21.25p.Reuse content