Barclays: More IB Restructuring, Credit More Likely Focused On US Delinquencies

Barclays headline (BARC LN) could be credit positive but perhaps overridden by wider credit concerns, esp. in the US:

*BARCLAYS PREPARING TO CUT HUNDREDS OF JOBS IN INVESTMENT BANK

• CEO Venkat has faced down activists and re-affirmed his commitment to the IB repeatedly, including at the recent strategy update (20-Feb). The bank’s equity has broadly tracked the sector higher since then.
• If Barclays does make “significant” headcount cuts then this could be a credit positive – we must assume it will look to release capital from the business, improve profitability and, thereby, reduce risk.
• However, we’d note that we’ve heard these kinds of headlines before (most famously under CEO Anthony Jenkins a decade ago. More importantly, wider credit quality issues in the US (both Barclays’ significant credit card operations there plus its institutional exposure to CRE) are likely to override any credit sentiment improvement from this operational move.