BARCLAYS PLC LONDON (Reuters) - The new chief executive of British bank Barclays (>> Barclays PLC), expected to be former JPMorgan (>> JPMorgan Chase & Co.) banker Jes Staley, faces an early challenge in deciding what to do in wealth management after a decade of disappointment.
Most scrutiny is on whether the new CEO, replacing Antony Jenkins after his ouster in July, will continue to scale back in investment banking, or build it back up. But investors said there are other areas that need selling, fixing, or deserve to be expanded.
"A push into wealth management could help towards growing the dividend, because there’s a greater visibility of earnings, but on the other hand, that type of business is vulnerable to market fluctuations," said Paul Mumford, senior investment manager at Cavendish Asset Management.
"We have to wait for some sort of statement of intent. This is a company that is capable of reinventing itself and changing strategy, and refocusing onto areas it might not have concentrated so much on before," Mumford added.
Staley is close to being appointed CEO, a person with knowledge of the situation said on Monday. The American spent most of his 34 years at JPMorgan in its investment bank, but also ran its private bank for two years, then asset management for eight years from 2001.
Barclays has failed with big plans in the past for its wealth business, including an ambitious five-year initiative set out in 2010 known internally as "Project Gamma".
It wanted to double assets under management (AUM) to 300 billion pounds and lift annual profits to between 600 and 700 million, people familiar with the matter said.
But it didn't get close.
AUM were $131 billion in 2014, ranking it 25th biggest private bank with a market share of about 0.6 percent, according to Scorpio Partnership, a wealth management consultancy. By comparison, market leader UBS (>> UBS Group AG) had $2 trillion in AUM for a market share of 10 percent, Scorpio estimated.
SIGNIFICANT PROGRESS
Barclays Wealth and Investment Management sank to a loss of 98 million pounds in 2013 and the bank stopped reporting profits for the business, after it was folded into retail and corporate banking last year.
The business was cut back by Jenkins as part of a wider restructuring to rein in costs, cut complexity and boost profitability. Two years ago it said it would stop offering wealth management services in about 130 countries and cut jobs, and in June it sold its U.S. wealth and investment management business to Stifel (>> Stifel Financial Corp), making a loss on the sale.
Akshaya Bhargava was appointed last year to run the business, which a spokeswoman said had made significant progress, adding Barclays remained "focused on positioning the business for sustainable long-term growth in target markets around the world."
Barclays is not alone in struggling to crack private banking, where scale matters and customers can be reluctant to move, making it hard to win new business.
"Every bank wants to do private banking because they look at the big Swiss banks and see the scale of money they make, and think even if they could get a tiny slice of that pie, it would move earnings materially," said Chirantan Barua, analyst at Sanford Bernstein.
But he said Barclays and other banks lack scale in wealth management, and the main benefit from the business is the liquidity and funding they get from deposits rather than from profits.
That has deterred some from selling, as has the prize of tapping into the world's 36 million millionaires, almost treble the number of 2000.
(Editing by David Holmes)
By Steve Slater and Sinead Cruise
