The Irish unit of Barclays, which has become the British bank's post-Brexit EU hub, was knocked off the perch as the largest bank in the Republic last year as its balance sheet contracted and retail lenders Bank of Ireland and AIB saw their asset bases rise.
The latest annual report for Barclays Bank Ireland, published on Thursday, shows that the company's assets fell to €117 billion at the end of December from €135 billion a year earlier.
The bank, known internally as Barclays Europe, marginally eclipsed Bank of Ireland to become the largest Irish bank in 2020 after its British parent shifted tens of billions of euros of assets to the unit in preparation for Brexit.
The asset shrinkage last year was driven by a 40 per cent reduction in financial derivative instruments, to €33.9 billion, largely as a result of an improved netting of obligations between Barclays and other parties in financial contracts. It is now smaller than Bank of Ireland and AIB, which had €155 billion and €128 billion of assets, respectively, in December.
Still, Barclays Bank Ireland, led by chief executive Francesco Ceccato, an Italian native, swung into a net profit of €195 million last year from a €155 million loss for 2020, as total income rose 41 per cent to €1.12 billion and the company released €97 million of loan impairment provisions. It had booked €280 million of provisions in the previous year as banks globally worried about the impact of Covid-19 on borrowers' ability to repay debts.
Barclays Bank Ireland employs about 300 people in its head office in the Republic and about 1,400 elsewhere, across an operation that includes branches in Belgium, France, Germany, Italy, Luxembourg, Netherlands, Portugal, Spain and Sweden.
The company has two segments. The main one is a corporate and investment bank, where total income jumped 48 per cent last year to €863 million, mostly fees, as a result of increased client activity in investment banking and an ongoing migration of business from London to Dublin.
The second segment, called consumer, cards and payments, includes Barclays’s German credit cards unit and a growing European private banking business, which expanded into France, Italy and Spain last year. That division’s income declined by 11 per cent to €339 million.
While the bank said it "does not have any material direct exposure to" Russia and Ukraine, it warned in the risks section of its annual report that the broader geopolitical and economic consequences of the war between both countries may have a "material adverse affect" on business.
It added that while the global economy recovered last year from the severe contraction in activity in 2020, the outlook “remains highly uncertain”. It highlighted ongoing concerns about how the pandemic might develop, the impact it has had to date on supply chains, inflation, and whether central banks “will succeed in normalising monetary policy” as key issues.