Barclays Private Clients, the UK’s biggest wealth manager in terms of assets under management, released encouraging results for 2004. But so...

Barclays Private Clients, the UK’s biggest wealth manager in terms of assets under management, released encouraging results for 2004. But some analysts are still asking questions about its direction, particularly after the acquisition of Gerrard.

BPC saw gross profits rise by 40 per cent in 2004 to £144 million ($267.7 million). “We are very pleased with these results and they show we are heading in the right direction,” a Barclays spokesman told Wealthbriefing.

Acquisitions in the last 18 months have helped the profit numbers, but Barclays also said that organic growth had contributed substantially to profits.

The overall profit number was helped by a smaller loss on closed life assurance activities, which has been an ongoing drag on profits since they were closed in 2001. Revenues rose 22 per cent to £839 million, and net fee income and commissions rose 34 per cent.

Bob Diamond, who has been running Barclays Capital and chairing Barclays Global Investors, took over the running of BPC at the beginning of the year. Mr Diamond, a hard-nosed investment banker, has been largely responsible for the strong performance of Barclays Capital and has underpinned BGI’s success. Barclays hopes his success in these areas will be replicated at BPC.

John Varley, Barclays chief executive, said he hoped BPC would be a driving force in the group’s growth in future years. This statement and the appointment of Bob Diamond to oversee the private client business might suggest a more aggressive approach at the wealth manager in 2005. Are there new acquisitions on the horizon?

But others question whether Barclays has done enough to integrate Gerrard, the private client stockbroker, which the bank acquired at the end of 2003. “Barclays still has to explain to the sector what the rationale behind the purchase of Gerrard was,” said Michael Maslinski, a wealth management consultant with his own firm in London.

Analysts say the acquisition might have been driven by reasons not related to improving the overall private banking/client experience for clients, but rather more to do with empire building. “Some see it as a political move and I tend to agree with this,” said one former Barclays employee who did not want to be named.

Total customer funds, which comprise customer deposits and assets under management, rose just 2.6 per cent to £77 billion last year. This will disappoint Barclays and suggest that net new money flows are becoming tough to acquire.

Nevertheless, the profit numbers will give senior management the encouragement they need and should raise the profile of BPC within the Barclays empire.