By Steve Slater and Sinead Cruise
LONDON, Oct 13 (Reuters) - The new chief executive ofBritish bank Barclays, expected to be former JPMorgan banker Jes Staley, faces an early challenge in decidingwhat to do in wealth management after a decade ofdisappointment.
Most scrutiny is on whether the new CEO, replacing AntonyJenkins after his ouster in July, will continue to scale back ininvestment banking, or build it back up. But investors saidthere are other areas that need selling, fixing, or deserve tobe expanded.
"A push into wealth management could help towards growingthe dividend, because there's a greater visibility of earnings,but on the other hand, that type of business is vulnerable tomarket fluctuations," said Paul Mumford, senior investmentmanager at Cavendish Asset Management.
"We have to wait for some sort of statement of intent. Thisis a company that is capable of reinventing itself and changingstrategy, and refocusing onto areas it might not haveconcentrated so much on before," Mumford added.
Staley is close to being appointed CEO, a person withknowledge of the situation said on Monday. The American spentmost of his 34 years at JPMorgan in its investment bank, butalso ran its private bank for two years, then asset managementfor eight years from 2001.
Barclays has failed with big plans in the past for itswealth business, including an ambitious five-year initiative setout in 2010 known internally as "Project Gamma".
It wanted to double assets under management (AUM) to 300billion pounds ($457 billion) and lift annual profits to between600 and 700 million, people familiar with the matter said.
But it didn't get close.
AUM were $131 billion in 2014, ranking it 25th biggestprivate bank with a market share of about 0.6 percent, accordingto Scorpio Partnership, a wealth management consultancy. Bycomparison, market leader UBS had $2 trillion in AUMfor a market share of 10 percent, Scorpio estimated.
SIGNIFICANT PROGRESS
Barclays Wealth and Investment Management sank to a loss of98 million pounds in 2013 and the bank stopped reporting profitsfor the business, after it was folded into retail and corporatebanking last year.
The business was cut back by Jenkins as part of a widerrestructuring to rein in costs, cut complexity and boostprofitability. Two years ago it said it would stop offeringwealth management services in about 130 countries and cut jobs,and in June it sold its U.S. wealth and investment managementbusiness to Stifel, making a loss on the sale.
Akshaya Bhargava was appointed last year to run thebusiness, which a spokeswoman said had made significantprogress, adding Barclays remained "focused on positioning thebusiness for sustainable long-term growth in target marketsaround the world."
Barclays is not alone in struggling to crack privatebanking, where scale matters and customers can be reluctant tomove, making it hard to win new business.
"Every bank wants to do private banking because they look atthe big Swiss banks and see the scale of money they make, andthink even if they could get a tiny slice of that pie, it wouldmove earnings materially," said Chirantan Barua, analyst atSanford Bernstein.
But he said Barclays and other banks lack scale in wealthmanagement, and the main benefit from the business is theliquidity and funding they get from deposits rather than fromprofits.
That has deterred some from selling, as has the prize oftapping into the world's 36 million millionaires, almost treblethe number of 2000. ($1 = 0.6569 pounds)
(Editing by David Holmes)
Barclays (BARC)