Barclays warns on deals
BRITISH titan Barclays yesterday warned of a slowdown in investment banking activity in the past two months, suggesting wilting confidence in corporate boardrooms is impacting on dealmaking revenues.
Barclays finance director Chris Lucas told an analyst conference investment banking market conditions in May and June were “softer” than those seen in the first quarter, when Barclays Capital generated revenues of £3.8bn and profits of £1.5bn.
Lucas said: “[This particularly reflected] lower levels of capital markets and mergers and acquisitions (M&A) activity.”
Lucas’ comments fit in with guidance from other European institutions, many of whom have said investment banking business slumped in the second quarter as executives and investors took fright at the burgeoning Eurozone debt crisis. Analysts at MF Global estimate the drop-off in corporate work could hit investment banking profits by up to 40 per cent across the board.
Barclays, which is trying to rebalance its model away from dependence on BarCap’s earnings, also laid out a wide-ranging plan for its consumer operation, which will see £1bn invested over the next four years to improve customer service.
Setting out his strategy after taking over in November, global head of retail banking Antony Jenkins said Barclays would aim to be a top-five player in the UK, France, Italy, Spain and Portugal. The bank will spend £250m every year until 2014 refurbishing branches and overhauling IT systems in a bid to steal market share from its rivals. Jenkins said the growth would be largely organic.
Analysts expect Barclays to report net income of £3.8bn this year, down nearly two thirds from £9.4bn in 2009, according to Bloomberg.