Barclays bank’s new chief executive took the axe to the dividend today amid a group-wide shake-up, as disappointing annual results for 2015 included a further hefty hit for loan insurance mis-selling.
Jes Staley, who joined the bank in December, also signalled that Barclays planned to sell its 62 per cent stake in Barclays Africa over the next few years, ending its presence on the continent and becoming a “transatlantic” institution focused on the United States and Britain.
The bank said it would cut its 6.5p total dividend for 2015 to 3p for the next two years to beef up its capital cushions, sending shares in the bank sliding 8 per cent, or 13.95p, to close at 158.1p.
It came as Barclays reported a 2 per cent fall in underlying pre-tax profits to £5.4 billion last year, below a consensus City forecast of £5.8bn. Income was down 5 per cent at £24.5bn.
The results included an extra £1.45bn provision in the fourth quarter of 2015 for mis-selling payment protection insurance (PPI), taking the bank’s total for the scandal to £7.42bn.
Barclays also announced that it was splitting the group into two divisions – Barclays UK and Barclays Corporate and International – as part of regulatory ringfencing rules to separate riskier investment banking from high street banking.
Staley said the performance showed Barclays was “fundamentally on the right path, and is, at its core, a very good business”.
He added: “We are creating a transatlantic consumer, corporate and investment bank anchored in the two financial centres of the world [New York and London].”
The bank warned that it does not expect its performance in the first quarter of 2016 to be as strong as last year, citing turbulent market conditions and a “particularly strong March in 2015”.
Staley said regulatory pressures had pushed Barclays into making the “very difficult” decision of selling Barclays Africa.
“The reality is, in this new regulatory environment, we carry 100 per cent of the liabilities but only own 62 per cent of Barclays Africa,” he said.
Barclays Africa Group – which includes South African branch network Absa – has 12 million customers across 12 countries, including Kenya, Ghana, Zambi, Mozambique, Uganda, Botswana and Tanzania.
Shore Capital analyst Gary Greenwood branded the 2015 results “pretty dismal” on a “weaker than anticipated income performance”. Barclays’ annual report, also released today, revealed £3.4m in pay and bonuses for Staley’s predecessor, Antony Jenkins, who was ousted last July.
Jenkins picked up £516m in role-based pay, which the bank has introduced to sidestep EU rules capping banker bonuses, as well as a £505m annual bonus and £1.5m in long-term share awards.