Banking

Investors Seek To Break Up Barclays

Following the 2008 recession, many new regulations were put in place to help prevent a recurrence.

In particular, a magnifying glass was put on the banking industry with new ring-fencing rules set to start at the beginning of 2019. These new rules request that banks separate retail money from any risky investment banking activity to avoid a repeat of the banking crash financial crisis.

One major bank facing pressure from investors to spin off its operations is Barclays. A portion of its shareholder base is hoping for a full split, giving the bank’s investment arm two divisions with separate stock listings in the market.

Some investors, however, do not feel this is a strong enough effort. They are trying their best to light a fire under the bank to undertake a more significant separation, especially given recent weak profits and fines for past indiscretions.

In a recent interview with the Telegraph, a senior fund manager commented on not only his concerns but also those of others around him.

“There’s a lot of U.K. investors that wished they didn’t have an investment bank,” he said. “They hate the idea of having an investment bank with lower returns and volatility. They don’t believe it’ll ever get back to making a return above its cost of capital.”

Given the pressures from investors, and likely also the public consumer, we may see large investment firms and banks move further into separations to help assuage concerns.

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