Barclays reports surprise drop in trading revenue

The trading performance marked the first quarter under Tim Throsby, who was poached from JPMorgan Chase last year to help turn around the investment bank

(Reuters)

Barclays became the latest European bank to post disappointing first-quarter trading results that failed to live up to the gains American firms reported.

The firm posted a surprise drop in fixed-income trading revenue, in contrast with a collective 24 per cent jump achieved by its five largest American counterparts. Income from equities, the other main trading business, also fell more than expected.

Chief Executive Officer Jes Staley, 60, has thrown his weight behind the investment bank in London and New York, arguing a securities unit is a valuable counterbalance to its more profitable retail and credit card businesses. Capturing market share from European peers that are retreating from some markets would help the unit boost its returns.

“We didn’t have the uptick that a number of the US banks did,” Mr Staley said in a Bloomberg Television interview. “We could have done a little better on the U.S. rates side, but we’re not going to make any judgments on one quarter.”

The trading performance marked the first quarter under Tim Throsby, who was poached from JPMorgan Chase last year to help turn around the investment bank. Mr Staley has touted the need for Europe to have a successful investment bank based in the region, as American firms have seized share in the trading and merger advisory businesses in recent years.

Fixed-income trading dropped 1 per cent, while the equities business fell 10 per cent. Analysts surveyed by Bloomberg News had expected Barclays’s fixed income revenue to rise 17 per cent, while the equities unit was forecast to slump 5 per cent, according to the average of four estimates. Trading typically accounts for about a quarter of the firm’s revenue.

Any progress Mr Staley has made turning around the British lender risks being overshadowed by his attempts to unmask an anonymous whistle-blower in violation of company policy, revealed two weeks ago when the board reprimanded the CEO and reported him to regulators. Mr Staley may forfeit his entire £1.3m 2016 bonus over the scandal and could lose his job if regulatory investigations deem him unfit to run a bank.

“The full board of the bank did its review and voted unanimously to support me,” Mr Staley said in the television interview.

Barclays’s pretax profit more than doubled to £1.68bn, Barclays said in a statement Friday. Five analysts surveyed by Bloomberg had estimated pretax profit of £1.51bn. Total revenue climbed 16 per cent to £5.82bn, exceeding analysts’ £5.67bn forecast.

Bloomberg