BARC Barclays Plc

By Max Colchester 

LONDON--In his first three months as Barclays PLC chief executive, Jes Staley has redrawn the bank's global footprint, reshuffled several top executives and pressed the flesh with everyone from the U.K.'s prime minister to U.S. regulators.

On Tuesday, when Barclays reports full-year earnings, investors will get their first insight into the 59-year-old U.S. banker's vision for the lender. At stake: salvaging one of the U.K.'s last remaining universal banks.

Following a bold postcrisis expansion, Barclays is wading through a multiyear restructuring. Investors are getting impatient. The bank's stock has slumped 40% in the past 12 months.

Barclays's results are expected to be lackluster, weighed down by weak performance at its investment bank in the fourth quarter and lower returns as its African unit is pummeled by falling commodity prices.

Recapitalizing the business is "their number-one issue," says Joe Dickerson, banking analyst at Jefferies. Faced with this pressure, Mr. Staley is expected to continue pruning the lender to focus on its businesses in the U.K. and U.S.

The bank has been working on plans to gradually sell off its African division, according to people familiar with the matter. The unit is expected to be de-consolidated from the lender's accounts, these people say.

Barclays is also expected to accelerate the sell-down of unwanted assets and put cash aside to address some of the range of litigation problems hanging over the bank.

The prospect of falling investment-banking revenue "could prove a catalyst for change," say analysts at J.P. Morgan Chase & Co. Hundreds more jobs could go at the unit and capital could be shunted to other businesses, analysts say.

A Barclays spokesman declined to comment.

Barclays is a difficult ship to right. A cultural rift remains between its U.S. investment bank, largely acquired from the carcass of Lehman Brothers, and its profitable but staid U.K. retail business. Employees at the bank complain of a continuous churn of managers and byzantine bureaucracy. For instance, one consultant was surprised to discover the bank still paid cellphone subscriptions for staff that had quit the lender months earlier.

The bank is also in regulatory crosshairs. Barclays must split its U.K. retail unit from its investment bank by 2019. A big issue is ensuring the investment bank can continue to fund its activities as a stand-alone unit. Big corporate clients may be served from the entity that will house the investment bank to help fund it, according to people familiar with the matter.

In the U.S., regulators are forcing Barclays to move its American activities into a holding company. The unit may need a capital injection of up to $6 billion, according to analysts from Bernstein Research. It is unclear where these funds would come from.

U.K. officials are increasingly wary of crippling Barclays's investment bank. The bank is one of the biggest market makers in U.K. government debt. British authorities pushed for the bank to keep an office open in mainland China even as it announced plans to cut 1,000 jobs as it closed businesses across Asia, according to one Barclays official. The U.K. government is trying to make London a trading hub for the Chinese yuan.

To help him overhaul the bank, Mr. Staley handpicked several staff from his former employer, J.P. Morgan. Jonathan Moulds, known for his collection of Stradivarius violins, was axed as chief operating officer and succeeded by J.P. Morgan veteran Paul Compton. The bank is hunting for a new boss for its investment bank after Tom King stepped down as chief earlier this month.

The Barclays boardroom has also been overhauled. Former Standard Life PLC Chairman Gerry Grimstone joined Barclays as deputy chairman late last year. He is being touted by some industry watchers as a successor to current Barclays Chairman John McFarlane.

Mr. Staley is working to avoid the pitfalls that befell Bob Diamond, the last U.S. investment banker to run Barclays. Despite efforts to assimilate into London society that included becoming a vocal supporter of a local soccer club and attending the annual Chelsea Flower Show, Mr. Diamond's confrontational style irked politicians. He was pushed out in 2012 following a rate-rigging scandal.

So far Mr. Staley's more low-key approach has met with approval.

"He seems like a very nice chap," says a member of Parliament who recently met with him.

Write to Max Colchester at max.colchester@wsj.com

(END) Dow Jones Newswires

February 29, 2016 00:13 ET (05:13 GMT)

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