A Barclays bank branch in Madrid March 8, 2011.Sergio Perez/Reuters
Barclays Plc aims to generate more than £6-billion ($9.5-billion Canadian) of extra revenue by 2013, largely through efficiency measures, under a revamp plan laid out by its new chief executive on Wednesday.
Barclays said in a statement it wants to generate additional income of between £4.3-billion and £6.4-billion by 2013, compared with 2010. The top end of that range would mark a 20 per cent rise from last year's income of £31.4-billion.
Barclays and other U.K. banks face having to restructure to shield their retail business from riskier investment banking after the government backed a plan to overhaul the industry, and the bank said it continued to discuss reforms with regulators.
"Retail ring-fencing would not be our first option, but we can see ways it would work, though clearly there's a lot more work to do on the details," said Chief Executive Bob Diamond.
Mr. Diamond, who took the helm at the start of the year, reiterated his plan to lift return on equity (RoE) to 13 per cent by 2013, from an "unacceptable" 7.2 per cent last year, through cost-cutting, axing businesses and reshaping the portfolio.
He plans to cut investment banking arm Barclays Capital's credit market exposure and allocate capital to areas that generate returns above the cost of equity - Mr. Diamond promises to "have a plan of action for those that do not."
The bank will cut one-fifth of its 587 branches in Spain and 16 per cent of staff there as it tries to turnaround its European retail banking business, said Antony Jenkins, head of retail and business banking.
The recovery will be slow, with the RoE for European retail banking expected to be 4 to 5 per cent by 2013, and taking another two years to hit 13 per cent.
Jenkins said the bank was "not actively looking" at acquisitions in Europe, after speculation Barclays could pick up a Spanish caja at a knockdown price. But he said he expected consolidation in western Europe in coming years and would look at opportunities when they arose.
The investor presentation gives Mr. Diamond the opportunity to present radical solutions and make a number of tweaks to its portfolio, said Alex Potter, analyst at Berenberg Bank.
"They could do much worse than getting rid of some of their marginal businesses. That stretches to BarCap - there are bits where they may have to wave the white flag and say that under Basel III (banking capital rules) this isn't going to make a standalone return," Mr. Potter said.
Mr. Diamond laid out his broad plans in February, saying he will sell assets such as Russian retail banking and cut annual costs by £1-billion.
Barclays' shares are in need of a kick-start - they have fallen a fifth since mid-February and trade at a discount to most rivals. By 3 p.m., Barclays' shares were down 1 per cent at 261.75 pence, as U.K. banks were hurt by the ring-fence plan.
Many of the world's top banks are grappling with how to lift returns at a time when they are being told to hold more capital.
In Britain, HSBC last month said it would cut back in retail banking and slash costs by £2.15-billion pounds.
Antonio Horta-Osorio, new chief executive of part-nationalized Lloyds Banking Group Plc., is due to outline his strategy on June 30.