Barclays Boss: Hard Brexit Could Be Disaster For Banks

Photo by Håkan Dahlström via Flickr

On Thursday, Jes Staley, the chief executive of Barclays, admitted that the banks in the United Kingdom are being punished by the vote to withdraw from the European. He warned that a “hard” Brexit would be a disaster.

The American banker was speaking as Barclays reported a 20 percent increase in its half-year profits to £3.7 billion. Staley said that it is considered as a sign that the bank is “clean” and is prepared to keep stealing business from Wall Street titans such as Morgan Stanley and Goldman Sachs.

Staley said that Royal Bank of Scotland, Lloyds, and Barclays are all “paying a steep price for Brexit,” with its share prices not being able to reflect the value of the firms.

He stated: “British banks are on the lowest multiples of any banks.”

He added: “It is very important to get an agreement, to continue in the customs union.”

He warned that while a “hard Brexit” may have some benefits in the long term, the short-term effect would be immense.

Barclays is currently under fire from Ed Bramson, an activist investor. Bramson thinks that the bank has billions of dollars in capital that it could immediately return to investors.

Staley admits that Barclays could soon have the cash to play with, however, he ruled out a huge merger deal.

He stated: “The bank is clean. All the major legacy issues are dealt with. This is a bank that is functioning. We are going to be generating excess capital going forward, but I don’t believe we should be going into another restructuring.”

He added: “All you’ve got to do is look at Deutsche Bank.”

Barclays paid out approximately £1.4 billion to the Justice Department of the United States, knocking results of the company. However, the investment banking arm had reported record returns from advising clients over takeovers. The overall revenue of the company was flat at £10.9 billion.

Staley admitted that Barclays has a history of producing “self-inflicted wounds.” He said: “We want to be boring”.

Also, there was another £400 million pay-out for the PPI claims, aside from which, the UK arm is reportedly doing well.

The shares of Barclays were flat at 191p, which in turn, values the bank at £33 billion.

Bramson has established a 5 percent stake and has informed his own backers that he wants Barclays to abandon its trading arm.

Staley said that while the bank has had talks with Bramson, it is still far from clear over what his intentions are.