Barclays Bank is planning to cut back its private banking business in a bid to improve profitability. In doing so, the U.K.-based company will also restructure operations in Switzerland, according to sources close to the bank.
Even before Jes Staley is properly installed at the helm of Barclays, the rumor mill is gathering pace. The new CEO und former UBS board member, who will start in his new job in December, wants to boost profitability at the proud institute, which has been the source of scandals and a string of restructuring attempts.
A radical change at the wealth management unit is figuring prominently on the list of options at the disposal of Staley, according to a report by «Bloomberg News». This would also affect the Swiss business as research by finews.ch showed.
Focus on the Best
Staley intends to concentrate on a few core markets in wealth management, according to «Bloomberg News». These are the U.S. and the U.K., according to the usually well-informed information service. Barclays is looking for buyers for the private-banking business in Asia as it lacks the critical mass, according to the report.
The reduction of activities won't stop at Asia though, finews.ch research showed. Barclays Bank (Schweiz) is preparing a divestment mandate for the wealth-management unit in Switzerland, investment bankers said. This doesn't come as a surprise to analysts. The frequent management changes both in London and in Switzerland made restructuring to a permanent feature at the unit.
The constant changes put a brake on the work with offshore markets and hindered investments, according to an insider. This in turn was particularly unfortunate because the bank lacked the necessary size in wealth management to take off in Switzerland.
Here to Stay, Bank Says
Francesco Grosoli, head of wealth and investment management in Europe at Barclays Bank disagrees: «We are relying on our longstanding connection with Switzerland, where our knowledge and banking services are closely linked with the corresponding growth strategy.» Barclays was here to stay, he told finews.ch. James Buchanan-Michaelson (pictured below), the new head of Switzerland, embodied the bank's determination.
Buchanan-Michaelson in August said he wanted to double assets under management in Switzerland to 28 billion francs.
Foreign Banks Are Leaving in Droves
In recent years, more and more foreign banks left the Swiss financial market. Among them were U.K. companies such as Coutts, Lloyds Private Banking and Standard Chartered. A structural crisis and a wave of new regulation forced internationally active institutes to concentrate on fewer markets. In the years from 2010 to 2014, 36 foreign banks left Switzerland, according to a study by the Swiss Bankers Association.
It comes as little surprise that Barclays is mulling a reduction of its wealth management. The Global Wealth Management unit has had a fourth consecutive quarter of declining profits, according to «Bloomberg News».
Barclays Bank (Schweiz), which operates a private bank and an investment bank, in 2014 saw assets under management dwindle to 11.8 billion francs, a reduction of 5 percent. Still, after a loss of 42 million francs in 2013, the bank in Switzerland returned to profit (5 million francs) last year.
