Barclays expects to take a writedown of about 1 billion kilos ($1.34 billion) on its annual post-tax revenue because of the U.S. tax overhaul, the financial institution stated in an announcement on Wednesday.
The reform to the tax system signed into regulation by President Donald Trump on Dec. 22 will drive the British lender to cut back the worth of its deferred tax property, prompting it to take a one-off cost in its outcomes for the 12 months to the top of December.
It can additionally result in the financial institution’s frequent fairness Tier 1 capital ratio, a key measure of its monetary energy, falling by about 20 foundation factors, the lender stated.
Since taking the helm at Barclays in December 2015, Chief Government Jes Staley has streamlined the financial institution right into a transatlantic lender targeted on america and Britain.
The restructuring has led it to exit a raft of non-core operations, comparable to its enterprise in Africa and models in Asia, in a bid to simplify its construction and increase returns to shareholders.
Barclays already slumped to a 628 million pound attributable loss within the 9 months to the top of September following write-offs within the wake of its exit from Africa. The 1 billion pound cost to account for the U.S. tax modifications is predicted to push it additional into the purple.
The $1.5 trillion tax overhaul is the largest reform of the U.S. tax system because the 1980s and can see that company tax fee slashed to 21 % from 35 %.
Whereas Barclays stated the discount within the tax fee is predicted to “positively affect” its future post-tax earnings in america, it additionally cautioned that the Base Erosion Anti-Abuse Tax (BEAT), which was included within the laws and designed to stop multinational corporations from abusing the tax code, may considerably offset that profit.
“As a result of unsure sensible and technical utility of many of those provisions, it’s at present not doable to reliably estimate whether or not BEAT will apply and if that’s the case, how it might affect Barclays,” the lender added.