Lehman Brothers bargain saves Barclays’ red faces
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The Barclays group has revealed group profit before tax was £6.077bn, down 14 per cent on 2007’s £7.06bn. It says this downturn is mainly in part to the credit market losses and writes downs that hit the bank during 2008 of £8.05bn.
Its saving grace seems to be the £2.26bn made relating to Lehman Brothers US business. Barclays bought the bankrupt investment bank’s North American investment operations for just $250m, including its New York headquarters.
Barclays group chief executive John Varley says: “The conditions in the market in the preceding twelve months were as difficult as any that we had experienced in many years. The environment has been extraordinarily challenging for nearly two years, and remains so.
“We have managed Barclays carefully through this period, but our shareholders have suffered a lot. Although we cannot control the price at which our shares trade in the market, we greatly regret the fact that the total return on our shares during 2008 has been heavily negative, and we acknowledge with regret, also, our decision not to recommend the payment of a final dividend for 2008, which is one of the consequences of the increased capital requirements introduced by the UK Financial Services Authority in October.”
Barclays, unlike several other large UK banks, has revealed it will forgo bonuses during this difficult time. Varley says: “The incentive payments across Barclays being significantly lower in 2008 than in 2007; executive directors will receive no bonuses for 2008. For 2009 and beyond, we are reviewing our compensation policies and practices to ensure that they evolve appropriately.”
