In interviews with BBC Radio 4’s Today programme, Radio 5Live’s Breakfast show and BBC1 Breakfast on 7 August 2008, James Edsberg discussed the latest results from Barclays. The group announced a 33% fall in pre-tax profits for the first half of the year of £2.75bn down from £4.1bn.
“The dynamo for Barclays growth in recent years has been Barclays Capital, the investment banking division of the group. This was the part of the business that is most exposed to US mortgage-backed securities. And as expected, the bank announced said it was taking charges of £2.45bn for bad debts, principally related to this exposure as well as other credit market problems”, said James Edsberg.
“The interesting development in the results is Barclays’ increase in its share of the UK mortgage market, up to 26% of the new mortgages made compared with 6% in the equivalent period last year. Barclays have always wanted to grow their Retail banking market further. And perhaps the fact that they were not so aggressive in marketing mortgages over the last few years has served them well now that this market has soured. That competition has now fallen away and as a deposit-taker, Barclays is in a better position to offer mortgages compared to the monoline mortgage providers.”
“The other interesting aspect to emerge from these results is around the Group’s capitalisation. In the recent past, some analysts have said that Barclays has been slightly under-capitalised compared to some of its competitors. This now appears to have been addressed. Following the recent placement of £4.5 bn from strategic investors including soveriegn-wealth funds from China, Qatar and Singapore, Barclays has raised its pro-forma equity Tier 1 capital ratios to the industry norm of around 6%”
“The dynamo for Barclays growth in recent years has been Barclays Capital, the investment banking division of the group. This was the part of the business that is most exposed to US mortgage-backed securities. And as expected, the bank announced said it was taking charges of £2.45bn for bad debts, principally related to this exposure as well as other credit market problems”, said James Edsberg.
“The interesting development in the results is Barclays’ increase in its share of the UK mortgage market, up to 26% of the new mortgages made compared with 6% in the equivalent period last year. Barclays have always wanted to grow their Retail banking market further. And perhaps the fact that they were not so aggressive in marketing mortgages over the last few years has served them well now that this market has soured. That competition has now fallen away and as a deposit-taker, Barclays is in a better position to offer mortgages compared to the monoline mortgage providers.”
“The other interesting aspect to emerge from these results is around the Group’s capitalisation. In the recent past, some analysts have said that Barclays has been slightly under-capitalised compared to some of its competitors. This now appears to have been addressed. Following the recent placement of £4.5 bn from strategic investors including soveriegn-wealth funds from China, Qatar and Singapore, Barclays has raised its pro-forma equity Tier 1 capital ratios to the industry norm of around 6%”
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