It seems that financials are still facing the heat, especially European-based banks. Barclays PLC (ADR) (NYSE:BCS) announced the slashing of its dividend and restructuring amidst an 8% drop in pre-tax profit to $2.9 billion or £2.1 billion last year. The bank also revealed that it would simplify its business model to just two segments, Barclays U.K. and Barclays Corporate and International. As a result, shares are trading down over 8% in pre-market activities.

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Plan To Divest Stake In African Business

Barclays said that as part of the restructuring plan, it would divest from a 62.3% stake in its African unit. Its CEO Jess Staley told CNBC that the challenge before it is to wind up non-core assets to simplify its business model. Staley said that the bank had to put litigation issues behind it in order to move forward.

For the year 2015, Barclays paid a dividend of 6.5 pence a share. However, it revealed that it was slashing its dividend rate to three pence a share this year. After the announcement, the company’s shares dropped 9% on the London Stock Exchange and trading was halted for a brief period. The company’s CEO defended its latest actions including the dividend cut and non-core business sale.

Good Position

Barclays said that it was reducing the dividend rate for the simple reason of accelerating the closure of its non-core business. Also, if the bank can successfully shed most of its non-core business transactions apart from focusing on the core franchise, then the bank would be in a good position. The company stated that it has enough capital for the transition.

Moving ahead for the first quarter, Barclays indicated that it does not see any robust performance in the first quarter from its investment banking segment. Also, the bank was not bothered unduly about loan exposure to the energy sector, which is struggling. The company suffered a net loss of £174 million for the year 2015.