Barclays overseas growth plan could see deals

 

British bank Barclays Plc plans to boost profit at its retail banking business with targeted expansion in key overseas markets such as Spain, Portugal and Italy, possibly including deals.

Antony Jenkins, head of global retail banking (GRB), said he is aiming for strong annual profit growth and "mid-single digit" annual income growth under a strategic plan for the next four years unveiled on Wednesday.

Overseas markets contribute 27 percent of retail banking profits, and Jenkins said that will rise, but he declined to say by how much.

Barclays will spend about 250 million pounds annually on improving customer service across its retail operations, which span 21 countries.

"Our plans are based on organic growth, though we would consider in-fill deals if they meet our strict financial hurdles" Jenkins told reporters on a conference call. He would look at "more significant opportunities" if they boosted scale, generated attractive returns and enhanced liquidity, he said.

Barclays has expanded aggressively in southern Europe and some other markets in recent years and will focus on building up in the countries it has a presence, rather than enter new markets.

That includes becoming a top five bank in Spain and Portugal "over a reasonable time frame" Jenkins said. The bank ranks eighth in Portugal and sixth in Spain, excluding cajas.

In Italy, he wants to get a top five presence in 10 key cities, mainly in the north where affluent customers are.

Jenkins was speaking before presenting his strategy for the retail business to analysts. He was promoted to oversee all retail operations in a restructuring in November, which included the surprise ousting of Frits Seegers.

Barclays has added more than 10 million retail customers in the last four years by building up in southern Europe and elsewhere, including entering new markets such as India, Pakistan, Russia and Indonesia.

But the bank has admitted its expansion in some markets was too aggressive at the wrong point in the cycle.

It suffered a big rise in retail bad debts last year in several countries and took a 100 million pound charge in March to quit retail banking in Indonesia and scale back operations in several other countries built up under Seegers.

"We have learned lessons from the past, principally about pacing investment for return and building scale and leveraging capabilities" Jenkins said.

Jenkins, who has previously worked at Citigroup and ran credit card business Barclaycard before taking the GRB helm, said he aims to deliver "strong annual compound profit growth" increase deposits at a faster rate than loans and deliver a post-tax return on equity of 13-15 percent.

Barclays has been on the lookout for a retail bank in the United States, according to reports earlier this year, to build on its successful investment bank build-up there, although that is not expected to be a priority.

By 1200 GMT Barclays shares were up 3 percent, outperforming a 1.2 percent rise by Europe's bank sector.