Barclays shares fall on wider loss, dividend cut
Shares of Barclays (BCS) fell sharply Tuesday after the British banking giant reported a wider loss for 2015, cut its dividend and announced plans to consolidate into two divisions and sell much of its Africa business.
The stock closed 8.11% lower at 158.10 pence on the London Stock Exchange, recovering slightly from a wider loss earlier in the session after the bank issued the earnings report. Barclays' U.S. shares closed down 5.83% at $8.89 in Tuesday trading.
The bank said Tuesday its adjusted pretax profit, which includes one-off items like provisions to pay for mis-selling policies in the U.K., fell by more than 50% to 247 million pounds ($344 million) from the year before.
Moving to address the red ink, the bank said Barclays would cut its dividend to 3 pence for 2016 and 2017, down from 6.5 pence last year.
Recently appointed Group CEO Jes Staley also announced plans to focus on Barclay's strength as a transatlantic consumer, corporate and investment bank, "anchored in the two financial centers of the world, London and New York."
The bank plans to streamline its operations in two clearly defined divisions, Barclays UK, which includes its United Kingdom retail bank and credit card business, and Barclays Corporate and International, which includes the bank's U.S. operations.
As part of the change, Barclays plans to sell down the 62.3% stake it holds in the bank's Africa business during the next two to three years. The proposed sale would enable the bank to deconsolidate the business from an accounting and regulatory perspective, Barclays said.
Bank officials said the decision was difficult, because Barclays has been in Africa for more than 100 years. "But in order to complete our restructuring in a reasonable time frame, and deliver for shareholders who have been patient for a very long time, requires us to make some definitive choices today about the future shape of the Group," the bank said in its annual report.
Staley said Barclays “is fundamentally on the right path, and is, at its core, a very good business."
However, Barclays disclosed separately that the U.S. Department of Justice and the Securities and Exchange Commission are investigating the bank over "certain of its hiring practices in Asia." The probes stem from the Foreign Corrupt Practices Act, a U.S. statute that prohibits payments to foreign government individuals in an effort to win or retain business.
U.S. authorities are also investigating whether Barclays' business relationships with third parties who help the bank gain or retain business are compliant with the Foreign Corrupt Practices Act, the bank said.
Contributing: Associated Press