Barclays CFO Says Client Returns And Investment Bank Capital Under Scrutiny

LONDON: Barclays (BARC.L) announced on Tuesday that chief financial officer Anna Cross stated the bank is eliminating unprofitable customer relationships and may reduce the capital allocation to its investment bank as it intensifies efforts to focus capital on businesses that generate higher revenues. Cross informed the Morgan Stanley European Financials Conference that corporate deposits at the British bank increased last year, aided partially by designating a lead treasury banker for each of the lender's top 800 corporate clients. However, Barclays was making difficult choices to decrease capital locked in unprofitable agreements. 

Barclays reviews investment strategy

"When those facilities are up for renewal, we are posing very challenging questions regarding whether those client returns meet or exceed expectations. If they aren't, what must be true to achieve that?" she stated. "And if we lack confidence in our abilities, then in the end, engaging in a challenging dialogue with that client. Those discussions have been taking place," she further said, per a Reuters report. Barclays is slightly more than a year into a three-year strategy aimed at cutting 2 billion pounds ($2.59 billion) from its expenses and reallocating a larger share of risk and capital from its investment banking division to its local lending, mortgage, and savings operations.

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Shareholders have welcomed indications of advancement in the strategy, which will lead to risk-weighted assets in the investment bank decreasing to 50 per cent by 2026, down from 63 per cent in 2023. Cross mentioned that "50 per cent was not the end goal," suggesting that the funds assigned to the business could decrease more, indicating his outlook on the investment banking sector and growth in the UK. In 2024, the bank reported enhanced results in securitised products, equity derivatives, and financing across fixed income and prime, Cross mentioned, and was working to regain market share lost to competitors in areas such as European rates. "We've advanced from position 12 to position 5 in prime and are developing both simultaneously. We're experiencing strong balanced momentum in that sector," she remarked.