Barclays isn’t the first bank to be let down by its investment banking business lately: indeed, HSBC and Credit Suisse have both indicated problems in that area. At BarCap (which, lest we forget, includes parts of Lehman Brothers), profits fell by 11% to £6.3bn – which, as with HSBC, was mainly down to a slump in commodities trading. Its retail banking business also saw profits plummet, by 63% to £446m – but that was largely thanks to the £1bn it had to fork out as compensation to customers who had been mis-sold payment protection insurance. So while paying out £1bn to anyone isn’t exactly good news, at least it’s a one-off. In fact, with that cost stripped out, profits in the division were actually up by a third, to £1.4bn.
What is definitely good news (for business customers, at least) was that Barclays agreed £20bn in gross lending over the last six months – £7bn of which went to small businesses. That means that it’s surpassed the targets set by the Project Merlin deal – although Diamond remains unenthusiastic about future aspects of banking reform, such as ring-fencing of customer deposits.
It obviously hasn’t been an easy first few months for Diamond, who took the role on January 1 this year. Partly, of course, that’s because of what he calls ‘chronic event risk’ in the eurozone (no, we’re not sure either). But he also acknowledged things have to change at Barclays: he said he wants to cut £1bn of annual costs by selling assets and reshaping Barclays’ portfolio, as well as sprucing up the third of the bank that’s under-performing. Having cut 1,400 posts already this year, he added that ‘you should assume this trend will continue and increase somewhat’. Which is rather ominous-sounding to Barclays’ 147,000 staff. That said, an HSBC-scale cull appears unlikely.
But despite his concerns, it seems Diamond is optimistic. Apparently, he wants Barclays to generate more than £6bn of extra revenue, compared to 2010. Ambitious, much?