Barclays delighted in the militant battle with the gains of the investment bank

LONDON (Reuters) – Barclays criticized its activist activist spokesman for reporting a rise in annual income from its investment bank, but also warned of a 150-percent supply. million pounds to cope with the potential losses of Brexit.

Barclays shares rose 3.5% on Thursday, as investors expected an annual profit of £ 3.5bn below expectations, focusing instead on the progress of its investment bank, which 15%.

Barclays chief executive, Jes Staley, struggles with a strategy of the bank and his active investor, Edward Bramson, believes that the lender should abandon his expensive plan to develop his investment bank and focus on other sectors less risky of its activity.

This month, Bramson has sought to increase pressure on the bank by submitting an application for membership on the board of directors. This decision, which according to investors, was unlikely to succeed, but has strengthened the focus on the performance of the investment bank.

The results gave ammunition to both parties in the debate. Staley highlighted the return on equity of the investment bank – a key measure of profitability – rising from 2% to 7% in 2018, which is close to the group's overall target of 9% set in 2019 .

The fixed income, currency and commodity trading businesses outperformed weaker fourth quarter markets than its Wall Street counterparts, with sales down 6% from declines in the first quarter. two figures from Goldman Sachs, Citi and JPMorgan.

Staley refuted Bramson's charge in a letter to investors in December that Barclays had purchased this improved performance at the expense of long-term profitability by offering uncompetitive pricing to customers.

"If you have portfolio managers and traders at Blackrock and Brevan Howard who decide to direct a transaction to our trading desks that then generate revenue for the bank, we do not buy that business," he said. -he declares.

Staley said he still had not heard Bramson's proposals, but would do so when the couple met in New York next month.

Barclays chairman John McFarlane recommended investors vote against Bramson's election to the bank's board of directors in the lender's annual report.

PROVISION ON BREXIT

Profits fell by 3% in Barclays' UK division with the Brexit provision, as well as fixed interest margins on loans which, according to Barclays, could still fall in 2019.

The bank also saw a 20% drop in business loan revenues, driven by resources deployed elsewhere in the world.

This offered ammunition to critics of the investment strategy led by the investment bank who opposed the allocation of resources to a unit that still accounts for half of the bank card and consumer activities more profitable from the bank.

"As a Barclays seller, the main concern is always that the results are so bad that management is forced to reverse a strategy designed to destroy shareholder value," said broker analyst Edward Firth. KBW.

Barclays' Brexit provision of £ 150 million followed similar moves by HSBC and Royal Bank of Scotland in recent days.

Barclays said the provision reflected the lower of two economic scenarios, in which growth would slow to 0.3 percent and the unemployment rate in the country to 5.7 percent.

Capitalist concerns

Barclays has paid a dividend of 6.5 pence per share and has announced its intention to return more capital through dividend increases and share buybacks, if any.

The bank, however, announced that its core capital ratio dropped from 13.3% a year ago to 13.2%, a decline that should boost the debate about its ability to return more capital to shareholders at a lower level. moment when rivals Lloyds Banking Group and RBS are preparing more and more. payments.

Staley's total salary for 2018 fell to £ 3.36 million from £ 3.87 million the previous year. He was the lowest paid of the four largest British bank chiefs.