Barclays PLC (LON:BARC) faces some hard decisions to sort a worsening capital ratio compared to rivals according to Goldman Sachs, which slashed its rating on the blue blood UK bank to sell.
While Goldman says Barclays has a number of levers available to ensure the group continues to build capital - retained earnings, incremental asset cuts, maintaining the current level of dividends for longer – the hit will be on shareholder returns.
Uncertainties remain around the group’s capital progression (litigation, Africa proceeds) and requirements for the non-ring-fenced bank).
“We believe this will require the capital gap to narrow somewhat, driving a more muted dividend and profit outlook. “
CLICK HERE: For a daily round-up of all the Proactive news
Goldman is now assuming Barclays’ dividend stays flat for at least the next three years at 3p per share even though earning rise by more than a quarter over the same period, though Goldman also factored in a hefty cut in profits.
'Sell' is now the rating from 'neutral'with a price target of 180p or 13% below today’s 207.5p.