Barclays PLC ADRBCS

Morningstar Rating

Stock Research and Analysis

by Erin Davis

Barclays is one of the three largest banks in the United Kingdom and has expanded around the world. Its large market share in its entrenched businesses--retail and business banking, credit cards, investment banking, and now its 20% stake in BlackRock Read more

Bulls Say

Barclays has deftly sidestepped the huge write-downs taken by many other investment banks. Its strong position will allow it to gain market share at the expense of weaker rivals.

Prudent management practices such as bold measures to fix underperforming units and a strict adherence to generating economic profits should benefit shareholders.

Barclays Capital's push into emerging markets, such as China and Africa, will diversify the company's revenue stream and help stabilize profits, which will be especially valuable in the current difficult economic environment.

Barclays' acquisition of Lehman's operations out of bankruptcy enabled the bank to buy a very profitable business for a song while leaving behind the riskiest assets. Read more

Bears Say

As currently proposed, changes in capital regulations could leave Barclays short of capital. As a result, it may need to sell valuable assets, such as its stake in BlackRock, or cut back on risk-taking in investment banking--either of which would reduce profitability.

Barclays escaped buying ABN Amro and avoided RBS's RBS fate more by accident than by design. Barclays' has not left behind its empire-building ambitions and next time it may not be so lucky.

Delinquencies remain high in Barclays' loan book, especially in commercial lending. Loan losses are likely to dampen any windfall profits from investment banking.

Barclays makes about 60% of its loans in the U.K., which is facing an ever-deepening recession. Delinquencies there could cause significant losses at the bank.

Barclays' trading profits are likely to decrease as regulators sharply increase capital requirements and as competition reduces spreads. Read more

Strategy

Barclays' short-term strategy is aimed at building up its capital to weather the downturn in the U.K. In the longer term, Barclays aims to earn two thirds of its income from retail and commercial banking Read more

Management

John Varley became CEO in 2004. He joined Barclays in 1982 and is married to a member of the bank's founding family. Varley is leading a cultural revolution at Barclays that is intended to increase the bank's global competitiveness, performance orientation, Read more

Profile

Barclays is one of the largest banks in the United Kingdom and has operations around the world. Its businesses include U.K. banking, which serves retail and business customers Read more

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