Barclays to return £10bn to shareholders

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Barclays has announced a plan to return £10bn to shareholders over the next three years and rein in costs as chief executive CS Venkatakrishnan attempts to revive the UK bank’s languishing share price.

In a series of changes set out on Tuesday, Barclays also said it would shake up its corporate structure, establishing five divisions spanning retail banking, wealth management and investment banking.

The plans are part of the first major strategy update at Barclays since 2016 and mark the biggest test for Venkatakrishnan since he succeeded Jes Staley in late 2021. Under both CEOs, Barclays’ investment bank has grown rapidly but failed to lift the group’s share price.

Barclays said the £10bn capital return would come via share buybacks and dividends. Barclays returned £3bn to shareholders last year.

“Our new three-year plan, which we will be announcing at the investor update today, is designed to further improve Barclays’ operational and financial performance, driving higher returns and predictable, attractive shareholder distributions,” said Venkatakrishnan.

Barclays is also planning to keep a tight lid on expenses, aiming for a cost-to-income ratio of 63 per cent this year, down from 67 per cent in 2023. The bank wants the figure to fall to the “high 50s in percentage terms” by 2026, with total group operating expenses of £17bn, slightly higher than the £16.9bn reported for 2023.

The bank’s shares jumped 6 per cent in early trading on Tuesday.

Analysts at JPMorgan Cazenove wrote: “Overall, we think that management’s plans could imply double-digit upgrades to consensus forecasts at face value, but with the plans reliant on revenue growth (including IB), the focus is likely to be on the conviction and details behind the targets, along with confidence in execution.”

The bank, which has roughly 85,000 employees, is trying to win over investors just as the boost from higher interest rates begins to fade. The Bank of England this month opened the door to cutting interest rates.

Shares of Barclays have fallen by a quarter since Venkatakrishnan took the top job in November 2021.

The bank said on Tuesday that it was aiming for a return on tangible equity of more than 12 per cent in 2026, up from an adjusted 10.6 per cent in 2023.

Following the change in corporate structure, the bank will be managed through five divisions: UK banking, UK corporate banking, private banking and wealth management, investment banking and US consumer banking.

Barclays announced new management for most of those divisions on Tuesday, with the investment bank being co-led by four people.

Barclays also reported that pre-tax profits for last year fell to £6.6bn from £7bn a year earlier.

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