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Barclays sets $1.1B charge
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February 2, 1998: 12:07 p.m. ET
British bank cites losses from the spinoff of its BZW investment arm
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NEW YORK (CNNfn) - Barclays PLC, Britain's second-largest bank, said Monday it will incur $1.1 billion in 1997 pre-tax losses from the spin-off of its BZW investment arm, just one element in a wholesale overhaul of the bank's vast global operations.
The announcement came less than four months after Barclays divulged plans to reorganize its investment banking activities and pull back entirely from its equities, equity capital markets and mergers and acquisition advisory business. The revamping included a halt to the bank's activities in Australasia, where the ripple effect from Asian market turmoil has lapped up on corporate balance sheets.
"We made a strategic decision to redefine our investment banking business in the autumn, because continuing to invest in parts of the business no longer made commercial sense for us," said Martin Taylor, Barclays' chief executive, in a statement Monday from the bank's London headquarters.
The total loss is an aggregate of three separate debits, including a $555.9 million charge on the one-time withdrawal and a $358 million operating loss for the businesses Barclays sold. The bank expects an additional $210.9 million charge for goodwill.
The bank also expects tax relief of 24 percent on the $555.9 million withdrawal charge. Barclays will issue its full 1997 earnings report on Feb. 17.
Barclays, which ranks just behind HSBC in the U.K. in terms of total assets, has 2,500 banking branches in Britain. It also sells life insurance and offers private banking services in more than 1,000 branches in 76 countries.
A new unit, Barclays Capital, has been created to handle BZW's remaining fixed-income and foreign exchange businesses.
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Barclays Plc
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