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Pre-Tax Profit Falls Sharply At Barclays Wealth, Hit By Lehman, Closed Life Deals

Tom Burroughes, Editor , London, 16 February 2010

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The pre-tax profit at Barclays Wealth for the year ending 31 December slumped by 78 per cent to £145 million ($228 million) from a year ago, hit by the sale of a closed life business and the cost of integrating the old Lehman Brothers North American businesses last year, the UK firm said.

If the impact of the transactions is removed, “there was solid growth in income due to growth in the client franchise and the product offering”, Barclays Wealth, part of the UK-listed banking group Barclays, said in a statement today. Adjusted income grew by 3 per cenbt driven principally by strong growth in the client franchise and product offering, the bank said.

Operating expenses at the wealth manager rose by 22 per cent year-on-year, which reflected the integration of the US business. Total client assets increased by 4 per cent to £151 billion, it said.

Total income, net of insurance claims, was £1.3 billion, a gain of 1 per cent from a year before.

Net fee and commission income in 2009 rose to £802 million from £720 million.

Barclays Wealth’s cost/income ratio rose to 85 per cent last year from 71 per cent.

Meanwhile, for the Barclays group as a whole, it logged a pre-tax profit – including the sale last year of Barclays Global Investors – of £11.6 billion, surging by 92 per cent year-on-year. If the sale of BGI to BlackRock is excluded, however, pre-tax profits fell by 13 per cent to £5.3 billion.

At the end of last year, Barclays had a Core Tier 1 capital ratio of 10 per cent, up from 5.6 per cent at the end of 2008.

Among other business divisions, Barclays Capital, its investment bank, logged a pre-tax profit of £2.464 billion (2008: £1.302 billion) after absorbing £1.820 billion of own credit losses.

John Varley, chief executive, and Robert Diamond, group president, have decided to decline annual bonuses for the second successive year, even though the board decided they were "merited based on both group and personal performance”, according to Marcus Agius, chairman, in today’s statement.

“The board has determined that 100 per cent of the 2009 discretionary remuneration for other members of the Barclays Group Executive Committee and all members of Barclays Capital Executive Committee, should be awarded over a three year period, subject to claw-back,” Mr Agius said.

“More broadly across Barclays, deferral structures have been implemented which are consistent with the new FSA Remuneration Code and the Financial Stability Board Implementation Standards endorsed by G20,” he added.

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