Barclays set to report falling revenue

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Stephen Morris London

Antony Jenkins’ two-year report card is due today, and it is shaping up to be a bleak read.

Barclays’ chief executive, who has seen shares slump 19 percent this year after scandals involving high-frequency trading and currency probes, may report that revenue at the investment bank dropped at least 20 percent in the second quarter from a year earlier, according to six analysts surveyed by Bloomberg News. That is about double the average decline for its US peers.

“It will be all about investment banking revenue” and cost cutting, said Chirantan Barua, a London-based analyst at Sanford C Bernstein.

“A mix of well-known structural headwinds added to a deleveraging business would lead to investment banking revenue being down 26 percent in the quarter.”

Jenkins will end his sophomore year with Britain’s second-largest bank embroiled in a US lawsuit alleging it hid the presence of high-frequency traders in its dark pool, or private-trading platform, and negotiating a settlement with the UK over a currency-rigging investigation.

The scandals on both sides of the Atlantic are overshadowing his pledge to overhaul the bank’s culture after it was fined for rigging Libor (London interbank offered rate).

The average estimate for first-half pretax profit, excluding costs incurred under the transform programme, was £3.62 billion (R65bn), Barclays said on Friday. The bank posted pretax profit, excluding gains and losses on the bank’s own debt and compensation charges, of £3.59bn for the same period last year.

The lender is scheduled to report results today. Chris Semple, a spokesman for Barclays, declined to comment.

Jenkins took over the top job in August 2012 after the scandal over the rigging of the Libor cost his predecessor Robert Diamond his job.

In May, he announced 7 000 cuts at the investment bank, increasing to 19 000 the number of jobs to go at the company by 2016. Barclays also said that it would create a bad bank, run by Eric Bommensath, to dispose of £115bn of assets.

The dark pool accusations made in a complaint by New York attorney-general Eric Schneiderman may thwart Jenkins’ strategy to focus on Barclays’ more lucrative equities business while cutting fixed income, currencies and commodities trading, known as FICC. The imposition of larger capital buffers by regulators and dwindling volatility are curbing revenue from fixed-income trading in Europe.

Analysts at JPMorgan Chase say that European banks’ FICC revenue in the second quarter may beat estimates based on the better-than-expected results of their peers in the US. Barclays gained 1.5 percent to £2.21 at 12.42pm in London trading. It is the worst-performing UK bank stock this year. – Bloomberg


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