Features

Trouble Ahead for Barclays

Trouble at Barclays – at Moneyweek.co.uk - the best of the week's international financial media.

Barclays has played its part in helping British consumers build up over £1trn pounds of debt in the past few years, and has made healthy profits along the way, says Lex in the FT. So it's no wonder that the UK banks cannot really complain that some of their loans have turned "sour".

So what's going on? Barclays has confessed that bad debt charges on unsecured loans and credit card advances have increased "significantly". And this is unnerving news for shareholders: the bank in February tried to play down the impact that the consumer downturn would have on its Barclaycard division, says Mike Verdin on Breakingviews.com. They were obviously unprepared for the significant blow to the division, which is responsible for one fifth of the group's profits. Moreover, the division also processes more than one third of all UK credit and debit card spending. In other words, if the economic environment looks like it may be in for a tough time, Barclays will undoubtedly suffer.

All that's now left for Barclays to do is hope that the interest rate hikes have come to an end, says Verdin. This would allow the bank to increase spreads, which in turn could chase away those newer customers who are creating the bad debt chaos. But if you think Barclays is in for a tough time, spare a thought for a number of Barclays rivals, says Lex in the FT. At least Barclays can turn to its Capital Investment bank division. That's more than can be said for Egg, HBOS and Lloyds TSB

Recommended

How long can the good times roll?
Economy

How long can the good times roll?

Despite all the doom and gloom that has dominated our headlines for most of 2019, Britain and most of the rest of the developing world is currently en…
19 Dec 2019
Donald Kendall: helping Pepsi win the cold war
People

Donald Kendall: helping Pepsi win the cold war

Donald Kendall was there to serve Nikita Khrushchev a Pepsi during a famous cold war détente with Richard Nixon. He went on to become a 20th-century m…
30 Oct 2020
Why do house prices just keep marching higher?
House prices

Why do house prices just keep marching higher?

Other asset prices may be dropping off as the second wave of Covid hits. But house prices just keep on climbing. John Stepek looks at what’s behind t…
30 Oct 2020
Great frauds in history: Carlton Cushnie’s befuddling Ponzi scheme
People

Great frauds in history: Carlton Cushnie’s befuddling Ponzi scheme

Carlton Cushnie set up a finance company which was valued at an estimated £230m, but made only one trade finance loan in its existence, which actually…
28 Oct 2020

Most Popular

The Bank of England should create a "Bitpound" digital currency and take the world by storm
Bitcoin

The Bank of England should create a "Bitpound" digital currency and take the world by storm

The Bank of England could win the race to create a respectable digital currency if it moves quickly, says Matthew Lynn.
18 Oct 2020
Don’t miss this bus: take a bet on National Express
Trading

Don’t miss this bus: take a bet on National Express

Bus operator National Express is cheap, robust and ideally placed to ride the recovery. Matthew Partridge explains how traders can play it.
19 Oct 2020
Three stocks that can cope with Covid-19
Share tips

Three stocks that can cope with Covid-19

Professional investor Zehrid Osmani of the Martin Currie Global Portfolio Trust, picks three stocks that he thinks should be able to weather the coron…
12 Oct 2020