Barclays Bank has reported a £1.1bn pension deficit as at 30 September 2016 from a £0.8bn surplus at the end of last year.
In its third quarter results published today, Barclays noted that its tangible net asset value per share decreased slightly from 289p in June to 287p in September which was driven by the pension deficit drop in its UK Retirement Fund defined benefit pension net assets.
Barclays’ DB pension fund assets dropped from £689m at the end of December 2015 to £204m in June 2015. At the end of September total DB assets fell further to £40m.
The bank said that the surplus to deficit movement was largely due to a decrease in the discount rate to 2.31 per cent per annum from 3.82 per cent last year.
The increase in liabilities was partly due to an increase in asset values driven by higher asset performance relative to the discount rate.
Hargreaves Lansdown senior analyst Laith Khalaf: “The bank has also seen a £1.1bn black hole appear in its pension scheme, through no fault of its own, as falling interest rates have caused its liabilities to balloon. Rising pension deficits have been a theme of this reporting season, and are an inevitable consequence of looser monetary policy.
“Barclays still has work to do, but there’s an increasing amount of light at the end of the tunnel. However despite the bank’s international exposure, it is still vulnerable to poor economic conditions in the UK, so if we do get a Brexit-induced slowdown, Barclays will feel the burn.”