Jenkins begins work to repair Barclays reputation
NEW YORK (MarketWatch) -- Seeking to reposition
Jenkins, who took the helm of Barclays (BARC) (BCS) on Aug. 30, told analysts on a call that he's committed to the universal-banking model and does not plan to break up the bank or exit whole business lines. A universal bank is both a commercial bank and an investment bank.
His comments should cap some of the wilder speculation about the future of the bank, which saw the departure of its previous chief executive and chairman after it agreed in late June to pay around $452 million in penalties to settle a probe into the fixing of interbank lending rates known as Libor during the financial crisis.
Jenkins, who previously led the retail and business banking unit, will undertake a review of all of the British bank's operations and announce the results to investors in the first quarter of 2013.
He said he wants to deliver sustainable returns above the cost of equity, as he also noted that Barclays's activities should "pass the test of external scrutiny and reputational impact."
"We know our reputation has taken major damage in last few months," Jenkins said. "We need to provide a portfolio of banking activities and value, but also pass the reputational test of broader society. That is very, very important for our brand and our ability to do business."
"Have I been told by regulators to use that as a filter? No, I haven't, but they are very interested in what we are doing here," he said.
Jenkins also talked about fairness and transparency when it comes to the products and services that Barclays offers as well as adhering to the highest ethical standards. He acknowledged that some business lines, such as proprietary trading, tend to draw more controversy than others.
London-listed shares of Barclays gained ground Monday. They have risen about 9% over the past three months.
Jenkins "said all the right things -- contrition in relation to past mistakes, active engagement with all stakeholders including the regulators, 'lots to do,' and, in a characteristically understated way, confidence about the outlook," noted Ian Gordon, analyst at Investec Securities.
"None of this will surprise, but if the market is willing to take [Jenkins'] agenda at face value, it should help to narrow Barclays's trading discount to tangible book," added Gordon, who has a buy rating and a 240-pence price target on the stock.
Ahead of the Monday call with analysts, UBS raised its price target on Barclays to 235 pence from 205 pence.
"We think the key to liberating value is a sensible and modest downsizing of the investment bank and a more rapid restructuring and/or disposal of the troubled European operations," UBS analysts wrote in a note.
Selling some assets, such as its African business, could create value for the British bank, according to UBS, which has a buy rating on the stock.
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