Barclays Swings For The Fences

Barclays bested activist investors

Image source: Riegsecker, Billion Photos - Shutterstock

What's going on?

British bank Barclays reported an annual profit on Thursday that may grant its CEO a stay of execution.

What does this mean?

Barclays’ 2018 earnings did fall short of expectations. But its investment bank delivered half 2018’s profits, with fourth-quarter trading revenue dipping only slightly versus a year ago – much better than feared. Big banks on both sides of the Atlantic saw tumbling trading revenues as stock markets stumbled and investors tread water late last year, and Barclays’ performance was bested only by Goldman Sachs according to Bloomberg.

Activist” Barclays shareholder Edward Bramson wants the bank to trim its investment banking business – typically expensive to run and less dependable than traditional consumer lending. But Barclays’ shareholders may vote to limit Bramson’s influence shortly, perhaps encouraged by the company’s fresh buyback announcement.

Why should I care?

For you personally: Credit when it comes due.

Banks worry about Brexit – none more so than British banks, including the Bank of England. Europe’s biggest bank, HSBC, put money aside this week to cover losses on its loans, despite its reputation for avoiding risky debtors. Barclays followed suit with $200 million to bubble-wrap its lending, including Barclaycard (25% of the UK credit card market). But nervous consumers haven’t run out on their credit card payments (yet). Barclays’ savers are actually keeping more money in their accounts – copying investors’ recent cash hoarding (tweet this).

For markets: Good banks – and bad banks due a spank?

Barclays’ forthcoming buyback likely indicated the company’s rude health, stopping its stock falling on Thursday. Rival Lloyds’ disappointing Wednesday results probably prompted a buyback too, lifting its shares. But continental bankers were in the naughty corner: UBS was fined $5 billion for tax fraud on Wednesday, and on Thursday, US financial regulators joined other lawmakers in investigating alleged money laundering at Danske Bank, whose shares fell 4%.

Originally posted as part of the Finimize daily email.

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