Barclays share price: lender presents US damage-mitigation plan

on Jul 7, 2015
Updated: Oct 21, 2019

Barclays Plc (LON:BARC) announced on Monday that it had drawn up a resolution plan for its US operations that would make it easier for the business to be wound down should it become overly difficult to continue trading. The plan was drawn up in anticipation of increased compliance costs following shortcoming identified by US regulators.

The development of the so-called “living will” cost $150 million (£96 million), and forms part of a broader move by the lender to reduce its US brokerage unit, Barclays Capital, to $185-215 billion. The process has already seen the business shrink from as much $521 billion in 2010 to $248 billion at the end of 2014, Reuters reported.
“Barclays has a global recovery planning process in place that includes a range of feasible options available to manage the viability of the group during stressed conditions,” it said in its submission on Monday.
Compliance and leverage rules “are likely to increase the operating costs and capital requirements and/or require changes to the business mix of Barclays’ U.S. operations,” Barclays said.
Barclays’ share price lost 1.58 percent to 258.80p yesterday, underperforming the FTSE 100 blue chip index which closed some 0.8 percent in the red. The lender’s stock reached an 18-month peak of 276.62p two weeks ago and is up nearly 20 percent on an annual basis.
Yesterday in the UK, sources claimed the bank aims to comply with new ring-fencing rules by creating a “narrow” ring-fenced bank. The firm will put as few customers and activities within the new unit as possible, industry sources have told Reuters. A smaller ring-fenced bank could allow the bank to more easily sell complex investment banking products to corporate clients.
As of 07:32 BST, Tuesday, 07 July, Barclays share price is 258.80p.

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