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Barclays Review Seen Including Delays in Targets, Exits

Barclays CEO Antony Jenkins
Barclays Chief Executive Officer Antony Jenkins will tomorrow announce details of the revamp as he comes under pressure to revive profitability at the investment bank by reducing costs and shrinking assets. Photographer: Simon Dawson/Bloomberg

Barclays Plc, Britain’s second-largest lender, may push back its targets for profitability and costs by 12 months and exit more businesses as part of Chief Executive Officer Antony Jenkins’s overhaul of the investment bank.

The lender may say it won’t meet its target of an 11.5 percent return on equity until 2017, a year later than planned, and won’t meet its goal of cutting costs to about half of income until 2016 instead of 2015, analysts at Citigroup Inc. led by Andrew Coombs wrote in a report to clients today.

Jenkins, 52, will tomorrow announce details of the revamp as he comes under pressure to revive profitability at the investment bank by reducing costs and shrinking assets. The London-based lender yesterday posted a bigger-than-estimated drop in first-quarter profit as a decline in revenue from fixed-income, currencies and commodities cut earnings at the investment bank by 49 percent.

“We do not expect Barclays to announce large wholesale changes to the existing strategy,” Coombs wrote. “Instead, we expect Barclays to expand the exit quadrant and illustrate the uplift to group returns from running down these assets.”

Barclays, which has already said it will exit four of its 75 business lines, may shrink or close most of 15 more it put on review, Coombs wrote. They include commodities, emerging-markets FICC as well as parts of its investment-banking operations in continental Europe and Asia. The bank may also sell its European consumer and business-banking divisions in Spain, Portugal and France, he wrote.

Job Cuts?

Other analysts have called on Barclays to eliminate more jobs to revive profitability. The bank said in February it would cut as many as 12,000 positions this year.

Chirantan Barua, an analyst at Sanford C. Bernstein in London, said Barclays could eliminate as many as 6,100 more jobs at the investment bank. That would include 5,000 at the European FICC operation, Barua wrote in an April 22 report.

The market expects the bank to eliminate as many as 15,000 jobs in all, up from the original 12,000 target, the British Broadcasting Corp. said today, without saying where it got the information. A spokesman at Barclays declined to comment on job cuts.

The stock fell 0.7 percent to 243.3 pence in London trading today, bringing its decline for the year to 11 percent, the worst performance among U.K. bank stocks.

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