Barclays CFO says client returns and investment bank capital under scrutiny

By Sinead Cruise

LONDON (Reuters) -Barclays chief financial officer Anna Cross said on Tuesday the bank was axing unrewarding customer relationships, and could make further cuts to the proportion of capital allocated to its investment bank, as it steps up efforts to direct capital towards higher-revenue generating businesses.

Cross told the Morgan Stanley European Financials Conference that corporate deposits at the British lender had risen last year, helped in part by assigning a lead treasury banker to each of the lender's top 800 corporate clients.

But Barclays was also taking tough decisions to reduce capital tied up in less profitable arrangements.

"..when those facilities come up for renewal, we are asking ourselves very, very difficult questions as to whether or not those client returns are at, or above, expectations. If they are not, what needs to be true to get them there," she said.

"And if we don't believe we can, then ultimately, having a difficult conversation with that client. Those conversations have been happening," she said.

Barclays is just over 12 months into a three-year plan to shave 2 billion pounds ($2.59 billion) from its cost base and reallocate a greater proportion of risk and capital from its investment banking unit towards its domestic lending, mortgages and savings business.

Shareholders have embraced signs of progress in the plan, which will see risk-weighted assets in the investment bank drop to 50% by 2026, from 63% in 2023.

Cross said "50% was not the final destination", hinting that capital allocated to the business may shrink further, reflecting its expectations about the investment banking business and UK growth.

In 2024, the bank posted improved performance in securitised products, equity derivatives and financing, both in fixed income and prime, Cross said, and was chasing down market share ceded to rivals in other products like European rates.

"We've gone from number 12 to number 5 in prime, and are growing those two together...we've got some real balanced momentum in that business," she added.

($1 = 0.7711 pounds)

(Reporting By Sinead Cruise; Editing by Amanda Cooper)