Joined-up thinking

31 August 2010 By George Hay Follow @gfhay

The UK bank’s universal structure allows it to tap cheap funding. If new regulations remove this advantage, spinning off Barclays Capital could help reduce its stock market discount. But jumping the gun without knowing the full scale of the crackdown could do more harm than good.

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Barclays' senior credit default swaps currently trade at 128 basis points, according to Reuters CreditViews. That compares to 168 basis points for Goldman Sachs and 205 basis points for Morgan Stanley.

Its investment bank, Barclays Capital, had 181.1 billion pounds of riskweighted assets in 2009, supported by 10.8 billion pounds of "economic capital". This yielded a 14.9 percent "return on economic capital". However, Barcap's regulatory capital is actually approximately 18 billion pounds, meaning the investment bank made a return on regulated capital of about 9 percent in 2009.

Barclays recently rearranged itself into two main strands of business global retail and commercial banking (GRCB), corporate and investment banking (CIB).

Barclays shares were trading at 296 pence on the morning of August 31, down 2.5 percent.

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