Barclays' profits fall as it chooses ‘tough but right’ path

Barclays revealed rising bad debts in the UK and Europe (PA)

Barclays profits fell by a quarter in the first three month of this year as new chief executive Antony Jenkins spent hundreds of millions of pounds on restructuring the bank.

He said: “In our goal to become the ‘Go-To’ bank we have not chosen an easy path for Barclays, but we have chosen the right one.”

Jenkins and new chairman Sir David Walker have virtually cleared out the entire board which was in place during the Libor-rigging scandal which led to the departure of their predecessors Bob Diamond and Marcus Agius.

Pre-tax profits dropped by £609 million to £1.79 billion after taking a £514 million charge for shaking up the business which will see 3800 employees lose their job this year. This comprises 1800 who have already gone from the investment bank and 2000 who will go across the western Europe branch network which will cost a further £500 million later in the year.

First-quarter profits were once again driven by the investment bank where profits rose by 11% to £1.32 billion — accounting once more for over 75% of the total. UK retail and business banking profits rose 29% to £299 million. Barclaycard profits rose 5% to £363 million.

Jenkins said: “We are making good progress in transforming the business and there is good underlying momentum across most areas.

“But the economic situation we find ourselves in, particularly in the UK, is going to persist for a long time. I don’t see any catalyst for change in that and so since we don’t expect any real topline or revenue growth we have got to cut costs.”

He said around half of Barclays’ 140,000 staff had now gone through its programme for improving the bank’s culture. He said: “It’s about not repeating the mistakes we made in the past but also about how we create the culture we need to take things forward. There are some good debates going on.”

Despite last week’s departure of investment bank head Rich Ricci and wealth-management boss Tom Kalaris, Jenkins said that no one had left “specifically saying that they couldn’t live with the new culture”.

Barclays said it had not put any further money aside for mis-selling payment protection insurance or interest-rate swaps on top of the £2.6 billion and £814 million it has already provided.