Barclays Swings to Profit but Sees Persistent Headwinds -- Update
October 23 2020 - 5:14AM
Dow Jones News
By Simon Clark
LONDON -- Barclays PLC Chief Executive Jes Staley sounded a
cautiously optimistic note about the U.K. bank's prospects of
rebounding from the coronavirus pandemic after it posted a profit
in the third quarter.
The London-based bank earned GBP611 million, equivalent to $799
million, in the three months to Sept. 30 after losing GBP292
million in the same period last year, when it took a one-off
charge.
"The bank, six months into this historic time, is strong and
resilient and profitable," Mr. Staley told journalists. "We have a
good chance to come out of this crisis in a stronger position in
fact than we went in."
British banks have been hit hard by the economic impact of the
pandemic after the nation reported the highest number of deaths
from the disease in Europe. Moody's Investors Service this week
downgraded the long-term counterparty risk rating of Barclays's
U.K. unit, following a cut to the nation's sovereign-debt rating.
Bank of England officials have asked lenders to assess the impact
of negative interest rates, a policy bankers are wary of.
Barclays set aside GBP608 million in provisions for losses from
loans during the quarter, representing a big reduction from the
GBP3.74 billion in provisions in the first half.
"Headwinds in Barclays U.K. are expected to persist into 2021
including the low interest rate environment," Mr. Staley said.
Banks across Europe are struggling to come to terms with the
pandemic, which struck after years of poor performance for the
sector. Many lenders are cutting business lines and considering
mergers to survive.
Profit at Barclays's corporate and investment bank rose 3% to
GBP627 million in the third quarter. The bank's U.K. unit earned
GBP113 million in the quarter, after losing money in the previous
three months and in the same quarter last year.
Barclays has for years styled itself as the U.K.'s version of
JPMorgan Chase & Co., Mr. Staley's former employer, spanning
retail and investment banking. The U.K. bank is under pressure from
activist investor Edward Bramson to slash its trading business.
Mr. Bramson, whose Sherborne Investors says it is the largest
shareholder in Barclays with a 5.9% stake, has said the bank's
trading revenue is volatile and poor quality because the lender
doesn't have the large corporate-client or wealth-management
businesses that generate trading flows at bigger rivals such as
JPMorgan.
Mr. Staley is also under scrutiny for his professional
relationship with a deceased former client at JPMorgan, the
convicted sex offender Jeffrey Epstein.
U.K. financial regulators said earlier this year that they are
investigating the relationship. When officials in the U.S. Virgin
Islands subpoenaed JPMorgan in May for information about Mr.
Epstein, they requested communications between Mr. Staley and Mr.
Epstein about the latter's accounts, services and island home in
the Virgin Islands.
Mr. Staley has said that his relationship with Mr. Epstein was
professional and began in 2000 when he was head of JPMorgan's
private bank and the financier was a client.
Write to Simon Clark at simon.clark@wsj.com
(END) Dow Jones Newswires
October 23, 2020 04:59 ET (08:59 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
Barclays (NYSE:BCS)
Historical Stock Chart
From Aug 2024 to Sep 2024
Barclays (NYSE:BCS)
Historical Stock Chart
From Sep 2023 to Sep 2024