BARCLAYS OVERHAUL SMACKS OF WINDOW DRESSING - ANALYST
Barclays is axing at least 3,700 jobs and pruning its investment bank as its new boss put his stamp on the troubled British bank by aiming to cut 1.7 billion pounds ($2.7 billion) in annual costs and raise standards after a series of scandals. Joe Rundle, head of trading at ETX, says that although the stock price will pop, Barclays will continue to struggle to rebuild its reputation.
SHOWS: LONDON, ENGLAND, UK (FEBRUARY 12, 2013) (REUTERS - ACCESS ALL)
1. ETX HEAD OF TRADING, JOE RUNDLE, SAYING:
"I think they're a good set of headlines and will probably read quite as well in the stock or probably pop. But the trouble is, I don't think there's actually, they're not really stepping away from their big bit of investment bank which is fixed income so they are still an investment bank and they're going to have this problem about reputation going forward.
(QUESTION: What about this LIBOR class action, how much do we know about that and how damaging could that be?)
I think it's going to be incredibly difficult for them to provide any sort of provision. They're definitely going to come out of the woodwork, these class actions, and this is going to be an overhang of the stock for a few years to come I think. But I don't think really that it's going to be very difficult to prove whether people benefited or were lost out by the LIBOR thing. So I think it will be really difficult to get any sort of closure on that.
(QUESTION: Just heard the CEO talking about counting on Barclays to deliver sustainable returns over time. How long is this going to take really do you think?)
Well I mean 2015 is where they're looking to get a return on equity which is great. And the cost of equity, I think that's probably going to be very difficult for Mr. Jenkins to get. He is in a really difficult situation. He is trying to make this a boring retail bank, but he's got this big investment bank in the background. So I think it's going to be a long time before we see a boring retail bank which is what he's trying to peddle out today.
(QUESTION: Sure. And another thing you know we're exploring is this, the ring-fencing, you know, how much value there is really in separating retail and investment banking when the government really wouldn't allow a bank decides to fail anyway, right?)
Yeah. I mean they wouldn't allow it to fail, but I think if Barclays gets into serious problems after the mistakes the government had made back in '08, they're going to be a lot harsher and you're not going to get such a cushy resolution as you did with RBS and Lloyds. So I think any sort of failure now will be very harshly treated. It won't fail, but certainly the bondholders and the shareholders will be taken out.
(QUESTION: Do you buy Barclays today?)
Yeah. I think you'll probably buy it for the small pop over the next couple of weeks on this you probably see as good set of headlines. But I think after that, it looks a little bit uncertain above �3."
