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Barclays Must Cut Investment Bank as Outlook Dims, JPMorgan Says

  • `Deteriorating' industry outlook means change is needed
  • JPMorgan forecasts 4 billion pounds of litigation by end 2018

Barclays Plc Chief Executive Officer Jes Staley should deepen cuts at the investment bank as the industry outlook deteriorates, and focus on its more profitable consumer and credit card businesses, according to JPMorgan Chase & Co.

The securities unit will generate a return on equity of less than 7 percent in the next three years, even if it eliminates 600 million pounds ($865 million) of costs, analyst Raul Sinha wrote in a report Thursday. The measure of profitability lags an average 14 percent return at its other businesses, he said. JPMorgan also estimates Barclays will have another 4 billion pounds of litigation and redress costs until the end of 2018.