Barclays share price is highly undervalued, CEO says

Barclays (LON: BARC) share price has sold off sharply in the past few days as investors digest the ongoing bank earnings season. The stock retreated to a low of 140p on Thursday, about 10% below the highest point this year. It also remains 24% below the highest point in 2023, meaning it is in a deep bear market.

Barclays share price chart

CEO Venkatakrishnan's view on Barclays

In a Bloomberg interview at the World Economic Forum, CEO C.S Venkatakrishnan said that he believed that the company is severely undervalued. This interview came at a time when Barclays is going through a rough patch. He said:

In December, Qatar’s sovereign wealth fund sold £510 million worth of stock, taking a substantial loss since the shares have retreated by over 30% from its 2022 highs. In 2022, a large investor sold Barclays shares worth $1.2 billion while Capital Group sold 399 million shares.

Investors are concerned about Barclays performance, especially in its investment banking division. Investment banking has been one of the worst-performing areas in banking as high-interest rates have reduced the need for M&A. Few companies in the United States and Europe are going public.

In the interview, the CEO defended the investment banking division, which he believes is an important part of the company. He believes that it is the biggest European investment bank that will be in demand for a long time. Also, he sees its role in London as crucial, especially for European companies wanting to avoid their American competitors.

Efforts to turn around Barclays underway

His statement came at a time when Barclays is working to turn around the company and boost its stock. In November, the company unveiled a plan to save up to $1.25 billion or 7% of itss underlying annual expenses. 

This turnaround will include job cuts at its Barclays Execution Services, popularly known as BX. It will also reduce bonuses, closing branches, and reducing workers in its retail and investment banking division.

Barclays is not the only banking group that is cutting costs. Last Friday, Citigroup said that it will slash 20,000 jobs globally while Goldman Sachs shed 3,200 jobs in 2023 as its slowdown continued. Other banks like Morgan Stanley and Bank of America have also shed jobs recently.

The next key catalyst for the Barclays share price will be its earnings results, which are scheduled for February 20th.