Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Will Hector Sants Make Barclays a Safer Share?

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

LONDON -- Barclays (LSE: BARC  ) (NYSE: BCS  ) has today announced the appointment of Hector Sants as head of compliance and government and regulatory relations. Sants' previous role was chief executive of the Financial Services Authority, the government's regulator of the industry.

Sants joins Barclays following a period of considerable upheaval at the bank. In July, the bank lost its chief executive, chief operating officer, and chairman. This followed Barclays' involvement in a scandal that has likely led directly to Sants' appointment.

In June this year, Barclays confessed that its staff had been colluding to fix a key benchmark interest rate. This led to regulators fining Barclays 290 million pounds. While that might not sound like a huge amount to a global bank, a bigger hit was taken to the company's reputation.

Work to be done
Investors will be hoping that Sants will introduce a more rigorous range of standards and processes to the bank. If he succeeds, this would reduce the risks to shareholders.

Unlike sector rivals Lloyds Banking and Royal Bank of Scotland, Barclays is already profit-making and dividend-paying. The forecast dividend for 2012 amounts to a 2.6% yield. An 11.6% increase in the payout is expected in 2013, boosting the yield to 2.9%.

At today's price, Barclays trades at just 7.2 times forecast earnings for 2012. Earnings growth is expected to continue in 2013, bringing the price-to-earnings (P/E) ratio down to just 6.8 times expectations.

Given that the average FTSE 100 (UKX) share trades on a P/E of 15.4 times earnings, Barclays looks too cheap. By half.

As Barclays is currently rated so low, any improvement in perceptions could have a significant positive impact on the shares.

What next for the shares?
There is clear room for Barclays to move higher. On a P/E basis, Barclays currently trades at a 57% discount to HSBC. The discount to Standard Chartered is 55%. Barclay's growth prospects do not look significantly worse than either of these rival banks. In fact, Barclays' dividend is forecast to grow faster than Standard Chartered's and only marginally slower than HSBC's.

If that wasn't enough, I think that both HSBC and Standard Chartered are already cheap themselves. Perhaps Sants' appointment will see the beginning of a significant rerating of Barclays' shares.

If you are interested in using shares to build your wealth, then you should take a look at what Warren Buffett has been doing. Buffett is probably the best investor on the planet. He has made billions. Recently, he has been buying shares in a U.K.-listed company. To find out which one and why, check out the free Motley Fool report "The One U.K. Share Warren Buffett Loves." Just click here to get the report and start learning from this super-investor today.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2152445, ~/Articles/ArticleHandler.aspx, 10/27/2016 3:32:56 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 6 hours ago Sponsored by:
DOW 18,199.33 30.06 0.17%
S&P 500 2,139.43 -3.73 -0.17%
NASD 5,250.27 -33.13 -0.63%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/27/2016 3:17 AM
BARC $182.90 Up +1.10 +0.61%
Barclays CAPS Rating: No stars
BCS $8.85 Down -0.05 -0.56%
Barclays CAPS Rating: ****