Barclays (UK)

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Barclays is now the UK's leading banking brand, having narrowly avoided the worst problems of the 2008 financial crisis. Following a difficult decade in the 1990s, during which it cut loose most of its global profile, Barclays set about re-establishing an international presence in the 2000s with purchases in Spain and South Africa. In 2007, it agreed outline terms for a merger with Dutch banking giant ABN Amro, before being beaten to that prize in a bidding war against a consortium led by Royal Bank of Scotland. It was to prove a lucky escape, as the purchase of ABN Amro subsequently came close to destroying its buyers. Saved from that fate, Barclays had no need for government aid in the global financial crisis which followed. Instead, it took advantage of the turmoil within the industry to snap up the substantial investment banking division of failed Wall Street giant Lehman Brothers for a bargain price. Despite its greater financial strength it has felt the impact of public and regulatory dissatisfaction with banks in general, receiving several large fines for fiscal misbehaviour as well as widespread negative media coverage, especially in the UK.

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Brands

Woolwich Barclays Wealth
Barclays Business Banking Barclaycard
Personal Banking Absa South Africa

Recent stories from Adbrands Weekly Update:

Adbrands Weekly Update 3rd Mar 2016: It's proving to be yet another grim reporting season for British banks, which continue to struggle with billions of pounds in litigation costs and expenses relating to PPI claims and exchange rate fixing. Barclays confirmed growing speculation that it will abandon its remaining international operations to focus on the UK and US corporate banking. It said it will gradually divest its 62% holding in South Africa's Absa Group and other interests in Africa over the next two to three years. Most other international interests assembled during the 2000s have already been sold. Statutory results for 2015 showed a 1% lift in total income to £25.5bn, but attributable losses more than doubled to £394m. That was largely the result of another £4bn in litigation provisions over the course of the year, and a £570m loss on the sale of international subsidiaries in Europe. Barclays' total PPI costs to-date reached £7.5bn. Adjusted profits excluding provisions slipped 3% to £2.7bn.

Adbrands Weekly Update 15th Oct 2015: British bank Barclays is set to name American investment banker Jes Staley as CEO, its third in three years. Another American, Bob Diamond, was forced out in 2013 in the wake of the Libor rate-fixing scandal; so too was his UK-born successor Antony Jenkins earlier this year after clashes with other members of the senior management team. Chairman John McFarlane has been caretaking the role since July on an interim basis. Staley spent more than 30 years at JP Morgan Chase in a series of senior roles, and is widely regarded as a disciplined and pragmatic leader, less brash or confrontational than either of his two predecessors. He left in 2013 to join a hedge fund after a power struggle among the various potential successors to JPMC's CEO Jamie Dimon. Reaction to Staley's appointment was mixed, with many interpreting it as a U-turn on Barclays' previously stated aim to quit investment banking.

Adbrands Weekly Update 9th July 2015: In an extraordinary development, UK bank Barclays has sacked chief executive Antony Jenkins, as a result of growing friction between him and other senior officers, especially investment banking leader Tom King. Newly appointed chairman John McFarlane will take on executive role at the group until a fulltime successor can be found. Formerly head of the group's Barclaycard division and later retail banking, Jenkins was appointed to the top role following the similarly dramatic department of Bob Diamond in the wake of the Libor scandal. However he has struggled to change Barclays' famously bureaucratic internal structure or rein in its investment banking division, whose past misdemeanours have led to a series of large fines from regulators. Changes have been made but, according to a statement, the board "concluded that new leadership is required to accelerate the pace of execution going forward".

Adbrands Weekly Update 21st May 2015: A group of British, American and Swiss banks were hit with another set of massive fines associated with exchange rate rigging. This is in addition to the separate investigation into manipulation of the Libor interbank rate, which has already resulted in other fines. In this latest development, regulators in the US and UK issued penalties totalling $5.6bn to Barclays, Royal Bank of Scotland, JPMorgan Chase, Citigroup and UBS. It is the biggest single banking settlement to-date, bringing the total fine for forex rigging for these banks to over $10bn. Libor accounted for an additional $9bn in fines. Barclays, which has not taken part in previous settlements, was handed the largest penalty of almost $2.4bn, but that's only slightly higher than the total $2.3bn that Citi has been fined in the two separate deals. JP Morgan's combined fine totals $1.9bn. "These unprecedented figures appropriately reflect the conspiracy’s breathtaking flagrancy, its systemic reach and its significant impact," said US Attorney General Loretta Lynch. Over the past two years, the world's biggest banks have paid out more than $60bn in penalties for a catalogue of wrongdoings.

Adbrands Weekly Update 5th Mar 2015: It's been a grim reporting season for British banks, waylaid by a variety of different woes. A common concern for several has been the slowdown in investment banking activity, already highlighted by the major US banks, and a sharp rise in regulatory costs and penalties. A number of Europe-based banks have already been stung by punishing fines in connection with foreign exchange manipulation, and numerous regulatory investigations are still ongoing. Barclays CEO Antony Jenkins expressed impatience of the poor performance of his own investment banking division. The group more than doubled its provisions for fines and costs associated with foreign exchange manipulation to £1.25bn, while total provisions for fines and litigation topped £2.8bn. Group pretax profits slumped by 21% but other charges and a payout to preferential shareholders resulted in an attributable statutory loss of £174m for the year, compared to a profit of £540m in 2013.


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Background

Free for all users | see full profile for current activities: Barclays traces its history back to the late 17th century when goldsmith Freame & Gould began lending money to royal courts and merchants to fund trade. In the days before street numbers, they operated in Lombard Street in the City of London under the sign of the Spread Eagle, which remains a key element in the Barclays logo. In 1736 John Freame's son-in-law, James Barclay, joined the business and came to play an increasingly important part in the business, managing a move into private banking on behalf of wealthy families. As other partners joined the bank, its business expanded, becoming Barclays, Bevan & Tritton in 1780. During the following century, Barclays began to acquire smaller rivals, becoming Barclays & Company in 1896. A series of small international banks, including the Colonial Bank and the National Bank of South Africa, joined the group in the early years of the 20th century, adding a network in Africa and the Middle East. In 1918 the company, now Barclays Bank Limited, amalgamated with the London, Provincial and South Western Bank to become one of the UK's 'big five' banks.

By 1950, Barclays had overtaken Midland to become Britain's biggest bank, and it was the first to use computers to manage its book-keeping. In 1966, Barclays pioneered the launch of credit cards in the UK, teaming up with BankAmericard, a predecessor to Visa, to launch the Barclaycard. (Rival card Access was introduced by Lloyds, Midland and NatWest in 1971). In 1967, the bank was the first in the world to open a 24-hour automatic cash dispenser (or ATM). A year later, Barclays attempted to engineer a merger with two other leading banks, Lloyds and Martins. Regulators blocked the Lloyds purchase, although the acquisition of Martins Bank went through.

Seeking a global profile, Barclays targeted the US market during the 1980s, acquiring American Credit and Bankers' Trust's branch network in New York. In 1986, the bank acquired two UK investment banks to form Barclays de Zoete Wedd (BZW), one of the biggest homegrown players in the newly deregulated British financial market. In 1990, the group acquired German bank Merck Fink & Co and France's L'Europeenne de Banque. But the recession put a stop to continued expansion the following year. (The German bank was sold again in 1999).

As Britain's biggest bank, Barclays had lent heavily to third world countries as well as to small UK businesses. Now these debts were rapidly turning bad, and the group was forced to write off around £2.5bn of loans in 1992. New CEO Martin Taylor began a wide range of cost-cutting measures, and started to dismantle the group's international and investment banking network. First moves were to slim down operations in Australia and the US. Then when BZW failed to dent the stranglehold of American banks on the investment market, it too was carved up, sold off in messy chunks to different buyers. The rump was restructured in 1997 as Barclays Capital.

The same year, Taylor put out feelers for a merger with rival NatWest, then struggling with its own over-expansion problems, but was rebuffed. Meanwhile tight internal cost controls led to a series of strike motions by counter staff at Barclays' UK branch network. The following year, Barclays Capital suffered the twin blows of bad debts in Russia and involvement in the collapse of hedge fund Long-Term Capital Management, which together cost the group some $250m. Taylor shocked the markets by resigning at the end of the year after his radical plans to demerge the bank's retail and corporate businesses were rejected by the board. Meanwhile, influential consumer advice service Which? awarded Barclays a wooden spoon for "the consistent mediocrity of its products". It took Barclays six months to find a fulltime replacement for Taylor. But there was a fresh blow when new appointee Michael O'Neill resigned unexpectedly on his first day in the job after apparently failing a routine health check.

Canadian banker Matthew Barrett finally took over the role towards the end of 1999. He got off to a strong start in early 2000, reporting pre-tax profits for 1999 up 30% to a record £2.5bn. Barrett also pledged to double profits by 2004 by cutting costs by £1 billion over three years. Although financial analysts welcomed these moves, customers were less happy and the bank was forced to endure several months of negative PR. Its plans to cut substantial numbers of branch outlets led to a public outcry against shrinking networks. Barclays pointed out that substantial moves towards telephone and internet banking, combined with competition from supermarkets and converted building societies, had left many branches with hugely reduced customer portfolios. Then, Barclays was involved in an embarrassing debate over charges imposed on customers using rival banks' ATM machines. Rival banks seized upon the opportunity to knock Barclays' branch closures and ATM charges in their marketing.

Barrett's next chance to shine came in mid-2000, when Barclays announced it would acquire Woolwich, the former building society, for £5.4bn ($8bn). That deal made Barclays Britain's fourth-largest mortgage lender with around 10% share and the country's biggest internet finance operation. Both brands were retained, with Woolwich's mortgages business being transferred to Barclays Mortgages. The group also sold its Dial vehicle leasing and contract arm to Dutch bank ABN Amro for £269m, and a 60% stake in its BarclaysNet ISP service to Freeserve. In late 2001 the group took a 25% stake in boutique investment start-up Bluebay Asset Management.

Barclays moved back into the international sector during 2003. In April it confirmed it was in advanced negotiations to acquire Spain's Banco Zaragozano, a few weeks after the bank's two main shareholders, Alberto Cortina and Alberto Alcocer, were each sentenced to more than three years in prison for defrauding investors in a property deal. The deal was tied up a month later with a price-tag of E1.14bn. The group was also reported to be bidding for Banco Atlantico, a small Spanish retail bank, at the end of the year, but lost the deal to a Spanish buyer. See full profile for current activities


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