Barclays boss says he will not be 'patient' with poor returns as it sets aside £750m for FX fines

The chief executive of Barclays has said he will not be “patient” with underperforming parts of the company, potentially raising the prospect of further cuts at its struggling investment bank.

Barclays investment bank, which was built up by Bob Diamond and hugely expanded with the acquisition of Lehman Brothers assets in 2008, saw a 32pc decline in adjusted profits last year.

The division’s return on equity, a separate measure of profitability, was just 2.7pc, compared to the 12pc Mr Jenkins says each part of the bank will have to surpass to prove its worth.

Although returns appeared artificially low due to double-counting of compensation, related to the bank paying deferred bonuses from recent years and switching to more fixed allowance payments last year, Mr Jenkins admitted that continuing poor performance could see changes.

“I’m not a very patient person,” he said. The group’s finance director Tushar Morzaria said: “We won’t hesitate to allocate the capital to generate [our desired] returns.”

Mr Jenkins last year announced 7,000 job cuts in the investment bank over three years, and has shrunk the division’s balance sheet.

The unit’s adjusted profits, including restructuring costs, fell 32pc to £1.4bn last year, while bonuses fell by 24pc.

“Management [said] that it would do ‘whatever it takes’ to raise Barclays’ return on equity above 12pc,” said Sandy Chen, an analyst at Cenkos Securities. “We can’t see how they’ll get anywhere near that target without huge cuts in the investment bank”

Barclays, which unlike other banks has yet to settle with any authorities in the UK or US over allegations it failed to prevent foreign exchange rigging, on Tuesday set aside an extra £750m related to the scandal, bringing its total bill to £1.25bn.

It also earmarked an extra £200m for PPI compensation for the final three months of last year, meaning it made £1.1bn of provisions last year.

These helped drag the group’s profits down 21pc to £2.3bn last year, although on an adjusted basis, which stripped out such one-offs, profits increased 12pc to £5.5bn. The bank cut costs and profits improved in its retail bank, Barclaycard and in Africa. Shares fell 3pc.

In legal disclosures in the bank’s annual report, Barclays revealed that it had “been providing information” to the US Department of Justice in connection with the authority’s investigation into precious metal benchmark fixing, which is investigating Barclays among others.

The bank said it was “continuing to co-operate” with authorities related to foreign exchange rigging allegations, and Mr Morzaria said the bank is “working as hard as we can” on the matter, but did not say when it expects to settle.