This case study paper will analyze the economics of Barclays, one of the largest financial providers in the UK and in the world. It will also use Barclay’s example to illustrate the peculiarities of banking industry functioning.
Overview of the Business
Barclays is an international financial services provider operating in more than 50 countries and serving more than 42 million customers worldwide. It engages in commercial banking, investment banking, wealth management and asset management. Its commercial banking arm offers services to British and international customers, including current accounts, savings accounts, mortgages, insurance, credit cards and consumer loans. It has a majority stake in Absa, a major South African bank. It has recently acquired Russia’s Expobank and announced its intention to buy Indonesia’s Akita.
Barclays’ investment banking and investment management business cluster consists of Barclays Capital, Barclays Wealth and Barclays Global Investors. Barclays Capital is an investment bank that also offers consultancy, financing and risk management services. Barclays Wealth provides private banking, asset management, stockbroking, offshore banking, and wealth structuring and financial planning services. Barclays Global Investors is one of the world’s largest asset managers and providers of investment management products and services.
Barclays’ net income amounted to £23,000 million in 2007, up from £17,333 two years earlier. Earnings per share constituted 68.9p, and return on equity was 20.3%. However, the results for the first half of 2008 were disappointing, profits being 33% down. While insignificant growth was delivered by Barclays’ commercial banking division, Barclays Capital profits fell 68%, and Barclays Global Investors profits were 32% less than in the second half of this year.
After the company refused to buy Lehman Brothers and the latter filed for bankruptcy, Barclays acquired Lehman’s