Barclays Bank SWOT Analysis

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Barclays Bank PLC

Strengths

  • Barclays has a widespread global presence, allowing it to spread risk and enjoy economies of scale.
  • The Barclays brand is well-established historically and continually promoted, for example through sponsorship of Premier League football.
  • Barclays is particularly associated with innovation. It brought out the first credit card in 1966, and has continued to develop cards, most recently the OnePulse card combing Oyster, cashless and credit functions for London-based customers.
  • The opening of several new flagship branches along with a refurbishment programme can be seen as an attempt to refocus on customer demands for a strong presence on the high street (see threats).
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Weaknesses

  • Services provided in Zimbabwe to individuals connected with Zanu PF have generated controversy and raised questions about Barclays’ ethical position: investors are increasingly concerned about ethics.
  • Large bonuses for Directors have attracted unwanted attention from commentators, and it has been speculated that the bank’s reluctance to take financing from the UK government is because that would end its autonomy with regard to bonuses.
  • Plans to expand in Asia were limited when Barclays were outbid for ABN Amro in 2006, and alternative expansion plans have had to be adopted.
  • The bank does not plan to pay dividends on its shares until the second half of 2009, making them less attractive to investors.

Opportunities

  • Barclays was keen to acquire some of Lehman’s assets prior to its collapse: after the collapse, they have been able to negotiate a better deal with liquidators which also allowed them to be very selective in which parts of the business they acquired
  • The bank’s strategy is to offer a full portfolio of services worldwide, providing a wide range of cross-selling opportunities.
  • Asia is still considered an opportunity for Barclays’ expansion, and operations are being set up in a number of locations.
  • Welfare provision has decreased in many countries because of the cost to governments, and Barclays sees self-provision as an increasing trend that it can utilise.
  • The court recently found that Barclays banking charges, which had been challenged legally, were enforceable, thus repayment is not necessary and charges can continue to be enforced.

Threats

  • If the economic downturn is prolonged, acquisition of Lehman’s assets could prove to be a mistake.
  • Barclays has been accused of moving loss-making investments associated with the sub-prime market from its accounts to those of other investors, and there is a risk it may be sued.
  • While offering a wide range of services provides opportunities, there is also the threat that customers may prefer to go to suppliers who present a more specialised approach.
  • Barclays acquired a reputation for closing branches because of a high incidence of this in 2000, and competitors have been able to position themselves as more consumer-friendly through a strategy of keeping branches open.
  • The Asia expansion is seen as risky given that Barclays are in a less strong position than banking industry leaders regarding capitalisation, and this may detract investors.

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