Barclays corporate bank needs five years to meet RoE target
Barclays will take another five years to reach its corporate bank's return on equity (RoE) target as bad loans in Spain drag on its performance, according to head of the unit John Winter.
Barclays will take another five years to reach its corporate bank's return on equity (RoE) target as bad loans in Spain drag on its performance, according to head of the unit John Winter.
The bank is working to achieve a RoE above its cost of equity, which is 11.5%, by 2015.
However, Winter said the corporate bank is only expected to recover to 8.0% by then and improve by 1.5-2 percentage points a year thereafter.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
"No-one's high-fiving each other over 8.0% RoE. But there's a great business here struggling to get out," Winter told Reuters.
Barclays Corporate, which provides services to businesses and financial institutions, has lost £2.1bn on bad loans in Spain in the past three years.
The unit contributes 10% of group revenue but its RoE has been below the bank's cost of equity for years. Last year RoE was just 2.9%.
RoE is a key measure of profitability. It is meant to be at least equal to the cost of equity, the return a bank pays to investors to compensate them for the risk they are taking.
Winter has been trying to turn the unit around since taking charge in 2009 and is shrinking the business in Spain to focus on clients with cross-border needs.
He said the bank had sold two parcels of Spanish loans at a significant discount. But instead of selling further loans at heavily slashed prices, the unit will try to regain value over the longer term, Winter added.
RD
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
MoneyWeek is written by a team of experienced and award-winning journalists, plus expert columnists. As well as daily digital news and features, MoneyWeek also publishes a weekly magazine, covering investing and personal finance. From share tips, pensions, gold to practical investment tips - we provide a round-up to help you make money and keep it.
-
Reeves warned against property tax shake-up – 3 ways it could backfire on first-time buyers
Rachel Reeves reportedly has her eye on high-end property taxes in the upcoming Budget, but there are concerns a shake-up could unintentionally hamper those trying to get on the housing ladder
-
Average Brits want to retire five years before they can – who has the widest retirement gap?
Brits are expecting to work for longer than ever but there are big disparities in the number of extra working years predicted. A small tweak could help close the gap