Barclays prepares to step up asset reduction target as it reports 26% fall in profit

Barclays, Britain's second-biggest bank, is preparing to step up its asset reduction target and said it's being probed by regulators investigating the possible manipulation of foreign-exchange markets.

Chief financial officer Tushar Morzaria will lead a review that will decide whether the lender will increase its £80 billion target, chief executive Antony Jenkins told reporters on a conference call today as the lender posted a 26 per cent fall in third-quarter pretax profit.

The company plans to publish the result early next year.

Barclays this month raised £5.8 billion in a rights offering after the bank in June was found to be one of two British lenders to miss stricter capital rules. Britain's Prudential Regulation Authority is imposing a 3 per cent leverage ratio, forcing banks to hold £3 of equity for every £100 of assets. Mr Jenkins said the lender is on track to meet that requirement by June.

The lender has reduced assets by about £20 billion so far, Deutsche Bank analysts led by Jason Napier estimated in a report to clients today.

Mr Jenkins told analysts on a call that he can say “with absolute certainty that over time, we’ll achieve more” than the £65 billion to £80 billion in deleveraging announced earlier this year.

Barclays closed at 268.45 pence in London, up 0.9 per cent. It has advanced 11 per cent this year, lagging Lloyds Banking Group’s 62 per cent gain. Royal Bank of Scotland has risen 13 per cent and HSBC Holdings Plc is up 5.7 per cent.

Pretax profit, excluding gains and losses on the bank’s own debt, fell to £1.39 billion in the third quarter from £1.87 billion in the year-earlier period, in line with estimates.

Revenue from fixed income, currencies and commodities dropped 44 per cent to £940 million the lowest since 2011. That pushed investment-banking revenue 22 per cent lower to £2.11 billion. – (Bloomberg)