Barclays sees profits rise and outlines ring-fencing plans
BARCLAYS has reported a rise in third quarter profit and announced proposals to ring-fence its retail banking operations as part of efforts to shield households and firms in the event of another banking crisis.
The lender said that pre-tax profit rose from £837 million to £1.1 billion as boss Jes Staley described the quarter as "particularly significant" as he announced new financial targets.
He said: "The third quarter of 2017 was particularly significant for Barclays as it was the first for many years in which we have not been in some state of restructuring.
"We now have high confidence in our capacity to assert when Barclays will start to deliver the economic performance which we know this group is capable of, and therefore today we are announcing new targets for 2019 and 2020 for Barclays."
Barclays also said that it is proposing a restructure to help it meet regulatory rules that demand all British banks with more than £25 billion of UK deposits section off their retail operations from their riskier investment banks by 2019.
"Barclays intends to satisfy this requirement by setting up a ring-fenced bank, Barclays Bank UK PLC, which will be separate from Barclays Bank PLC. The two entities will operate alongside, but independently from, one another as part of the Barclays Group under Barclays PLC," the lender said.
The bank said its proposals still require regulatory approval.
Ring fencing aims to avoid a repeat of 2008, when everyday people's deposits were put at risk and the Government was forced to bail out lenders left stricken by the collapse of the sub-prime mortgage market.
Barclays' third quarter results were buoyed by the absence of a payment protection insurance (PPI) provision.
In the first half of the year, Barclays put £700 million aside to cover costs relating to the scandal, which has engulfed the banking sector.
The group's total PPI bill stands at £9.1 billion.
Net operating income came in at £4.46 billion in the quarter, versus £4.65 billion in the same period last year as Mr Staley bemoaned the performance of Barclays' markets division.
He added: "The third quarter was clearly a difficult one for our markets business within Barclays International.
"A lack of volume and volatility in FICC hit markets revenues hard across the industry, and we were no exception to this trend.
"We did however see an improvement in profitability in Barclays UK, and a good underlying return from our consumer, cards and payments business, which partially offset the under-performance in markets."
Group profit before tax for the first nine months of the year was up 19 per cent to £3.4 billion.