Barclays cuts down Protium by a third
BARCLAYS has already sold off almost half of the assets that it previously tried to hive off in the Protium accounting trick that it reversed in April, BarCap co-head Jerry del Missier told investors yesterday.
Protium, the name given to a $12bn (£7.4bn) pile of risky assets that Barclays converted into a loan in 2009 to avoid marking them to market, has shrunk by a third or $2bn in just six weeks since the bank brought it back onto its books on 27 April. Some of the assets had already been marked down and a chunk of the Protium loan repaid, accounting for the rest of the decrease.
Missier, who was speaking at the bank’s investor day, said: “We’re now more confident that we can make further sales of legacy assets and we expect a reduction of £29bn (by 2013).” That will mean that the bank has to put aside less capital to meet the Basel III requirements.
Analysts welcomed the news, but said that it was unlikely the rest of the book would shrink quite as quickly, since the most saleable assets were probably offloaded first.
Chief executive Bob Diamond also addressed the prospect of the government imposing a ringfence around Barclays’ retail bank, which saw the bank’s shares drop 2.7 per cent yesterday.
“Ringfencing would not be our first option… we can see ways it would work, though clearly there is a lot more work to do on the specifics,” he told investors.
Barclays favours operational subsidiarisation over retail ringfencing, a proposal that would turn banks’ infrastructure into a separate company rather than segregating its retail assets.
The bank also announced a target of £6bn in extra revenue by 2013 via efficiency savings driven through by Diamond. That would be an almost 20 per cent rise on last year’s revenues.