Barclays pressed to shed investment bank

Newly-appointed chief executive Anthony Jenkins has in recent weeks been meeting with shareholders after promising to spend more of his time “listening rather than talking” with investors and regulators following his appointment.

Reports last nights claimed that at a seminar with Barclays investment bank executives at the end of last week, several investors expressed dismay at the lack of changes that have so far been made to the investment bank, reports The Telegraph.

At least three of the bank’s largest shareholders have urged Mr Jenkins to follow the example of UBS, which last month pulled back from the fixed-income side of its investment bank, the reports claim.

When Mr Jenkins was appointed at the end of August he said he was considering the organisational structure and would “spend a lot of time with external stakeholders”, listening to concerns about how the bank was run.

His first act was to order an immediate review of all of Barclays’ businesses and said the work could results in some businesses “shrinking”.

However, he attempted to head off rumours over the future of the lender’s investment banking arm, saying he was committed to maintaining a “premier investment banking franchise” despite a rash of scandals that have implicated the division in Libor-rigging and mis-selling of complex products to small businesses.
Reports last night said that sources close to Mr Jenkins disclosed he was undecided on what action to take with the investment arm.

Meanwhile, banks face having to hold more capital against operational risks after a spate of scandals has encouraged regulators to push for a bigger buffer against the actions of rogue traders such as UBS’s Kweku Adoboli and the “London Whale” affair that cost JP Morgan $5.8bn.

Other recent operational scandals have included Barclays being fined £290m for rigging Libor, Standard Chartered accused of helping fund terrorism and HSBC setting aside $1.5bn (£950m) for potential fines over links to Mexican money–laundering.

Regulators are particularly concerned that banks may not have enough capital to cover losses from operational risk, especially during a time of widespread cost-cutting.