Barclays PLC (LSE:BARC) continues to be dogged by its foul-up on the loan book front, which has caused its share buyback to be delayed for a second time.
The bank initially suspended its £1bn buyback programme in March for three months after it inadvertently sold more securities than it had on its books, requiring the bank to buy back the “phantom” securities.
Today, it announced that the share buyback will be delayed again while the US Securities Exchange Commission (SEC) investigates the faux pas.
Sophie Lund-Yates at Hargreaves Lansdown said the first-quarter results announced this morning were “bright” but the structured loan fiasco remains a cloud hanging over the bank.
“A mammoth blunder relating to the overselling of US securities means regulators are sniffing around, and the issue raises questions around governance and control, but ultimately shouldn’t cause a derailment of a large scale. The most taxing development right now is that the buyback has been delayed again, while discussions with the Securities and Exchange Commission rumble on,” she said.
Rob Murphy, managing director of financials at research house Edison Group noted that group income rose 10% from a year earlier, confounding analysts’ expectations of a 3% decline.
The group also delivered a return on tangible equity (RoTE) of 11.5% during the period, which was much better than the consensus expectation of 3.8%.
“Overall, the results stand in contrast to much weaker performances to wholesale peers Deutsche Bank and Credit Suisse,” Murphy observed.
“The market is still reluctant to re-rate banks due to uncertainty over the deteriorating outlook for economic growth given the squeeze on consumer real incomes and tightening monetary policy; however, Barclays has made a good start to the year,” he opined.
Michael Hewson at CMC Markets suggested the honeymoon period for newish chief executive CS Venkatakrishnan is “well and truly over” with his competence called into question.
Venkatakrishnan replaced Jes Staley, who stepped down from the chief executive role following an investigation into his relationship with disgraced US financier Jeffrey Epstein.
Epstein was arrested in July 2019 on child sex-trafficking charges and committed suicide while awaiting trial.
Barclays seemed reluctant to let Staley go, having stood by him before when he was ordered to pay £642,430 by the Financial Conduct Authority after attempting to find the identity of a whistleblower at Barclays.
Despite the postponement of the share buyback, Barclays shares were trading 3.6% higher at 147.08p in late afternoon trading.