Day: October 25, 2017

Barclays Case Analysis

Barclays Case Analysis

Barclays PLC Case Analysis Barclays’ core strategies: * Improve service for both retail and commercial customers * International growth: Barclays avoided taking capital and other support from the U. K. government, preferring to establish relationships with international investors in the Middle East and Asia. * Focus on maintaining a sound financial and organizational structure that anticipates and adapts to new regulatory changes. Barclays SWOT analysis:

Strengths: * Strong Brand Name: Barclays’ strong brand name helps to increase margins by charging premium prices for goods. Customers always perceive a higher standard of quality from companies with strong brand name. * Growing ROE: For the first six months of 2011, Barclays reported adjusted ROE of 9. 1% , 32% increase if compare with their full-year 2010 ROE of 6. 9%. * Geographically diverse business: Barclays plc generated 40% of total group income from its U. K. perations in 2010, 15% from other European Union, 15% from Africa, 25% from the Americas, and 5% from Asia. * Diverse business: Barclays operates in nine segments: UK Retail Banking, Barclaycard, Western Europe Retail Banking, Barclays Africa, Absa, Barclays Capital, Barclays Corporate, Barclays Wealth and Investment Management. And it has diverse business products such as mortgages, personal loans, credit cards, overdrafts, SME, insurance, deposits, funding and others. Weaknesses: Highly levered: Barclays has a debt to equity ratio of 1605% currently, even thought part of Barclays’ assets are stored outside of European, this highly levered bank is still at a high risk of not being able to afford their interest payments during this European debt crisis. * Bad stock performance: Barclays stock has decreased over 40% over the past couple of months due to the European Debt Crisis. Date | Stock Price (close)| May, 02, 2011| $18. 98| Sep, 02, 2011| $10. 60| Opportunities: * Potential growth in the U. S. found the source from Bloomberg that the Barclays Group has been looking at potential retail acquisitions in the United States. * Reduced competition: reduced competition due to competitors bankruptcies in the 2008 economic crisis will indirectly increase the profit margin for all firms that survived from the economic downturn. mlnk Threats: * Regulatory risk: Regulatory Risk arises from a failure or inability to comply fully with the laws, regulations or codes applicable specifically to the financial services industry.

Through Barclays Capital, it has high exposure to the fixed income cycle and the corporate credit cycle. Which more, Barclays as a retail bank is also exposed to the interest rate environment. * Strong competitors such as Lloyds Banking Group should focus on: Barclays and Lloyds both are centuries old institutions, and all have been among the UK’s biggest companies, they have similar market cap and business products. Strategic Recommendations: Barclays Revenue estimates by product (in millions) Revenue| 2005| 2006| 2007| 2008| 2009| 2010E| 2011E| Mortgages| 534| 429| 358| 745| 404| 916| 1428|

Personal loans| 1221| 1228| 1207| 1292| 1404| 1410| 1454| Credit cards| 1304| 1264| 1116| 1260| 1830| 1933| 1908| Overdrafts| 595| 646| 607| 607| 741| 684| 569| SME| 311| 302| 302| 324| 264| 260| 256| Insurance| 237| 307| 209| 170| 130| 76| 86| Deposits| 631| 1115| 1487| 1548| 1538| 771| 628| Funding ; others| 96| 50| 72| -9| -255| -55| 61| total| 4928| 5341| 5358| 5937| 6056| 5994| 6389| Currently, the most significant product from a revenue perspective is UK credit card lending which is contributing over 30% of UK retail revenue. However, Barclays’ mortgages are a less significant contributor at present than for peers.

I would recommend this firm to make mortgages to be their biggest revenue growth driver and to become one of the main revenue contributing products in order to see a reduction in the risk weighting of their overall asset portfolio. I believe Barclays can increase the revenue for their mortgage business segment by providing greater support for essential members of their support staff. A growing mortgage business is the result of an effective management practice. For example, invest in new equipment that could help staff members work more efficiently.