Barclays' Investment Bank Struggles as Activist Investor Circles--Update

By Margot Patrick 

LONDON -- Barclays PLC reported weak first-quarter earnings in its investment bank, days before shareholders are due to vote on a board appointment for an activist investor who wants to shrink the unit.

The British lender said net profit in its corporate and investment bank fell 30% from the first-quarter 2018 to GBP582 million ($752 million) from GBP834 million, because of reduced client activity, lower volatility and fewer corporate deals. The bank's overall net profit in the quarter was GBP1.04 billion, up from a GBP764 million net loss last year from regulatory settlements.

The results ramp up pressure on Chief Executive Jes Staley to prove the bank's strategic mix of consumer, business and investment banking can work. Sherborne Investors is asking shareholders to vote its founder, Edward Bramson, onto the board at an annual meeting May 2 to trigger a change in strategy.

"We had a weak quarter in investment banking fees," Mr. Staley said Thursday but noted that its markets business outperformed U.S. rivals for a sixth consecutive quarter. Barclays, with large trading businesses in New York and London, is one of the few remaining European banks attempting to compete with Wall Street giants such as JP Morgan Chase & Co. and Bank of America Corp.

Barclays said it is sticking by a 9% target for return on tangible equity this year and 10% by 2020. Some analysts downgraded their expectations in recent weeks that the bank will meet those targets. Barclays said it could cut costs below the current target if revenue conditions continue to be challenging this year.

In the first quarter, the ROTE was 9.6%. That figure, and the full-year ROTE targets, strip out litigation and conduct costs.

Write to Margot Patrick at [e-mail]

(END) Dow Jones Newswires

April 25, 2019 03:13 ET (07:13 GMT)

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