Was Barclays the problem, or its business model?

When the world applauds your obituary, as it has the death of Barclays' global ambitions, it seems you have been doing something wrong.

Barclays' shares rallied 7.69 per cent on Thursday after the bank announced a sweeping restructuring, the central planks of which are the creation of a bad bank to house impaired assets and, more importantly, huge cut-backs in investment banking.

It all amounts to an end for Barclays' long-time goal to be a global universal bank, a project fertilised by the ashes of Lehman Brothers but ultimately undone by inadequate profits.

But while investors were quick to work out that the global stage was not the right place for Barclays, perhaps the more interesting questions are about the read-across for other large banks.

Did Barclays' shares surge because it was bad at being a global bank? Or did they surge because Britain is a bad place for a global bank to call home? Or perhaps shares in Barclays surged because it is flat out bad to be a global bank.

All three explanations are plausible, and all three have a certain amount of evidence to support them. But the third - that the interests of investors are not well-served by committing capital to the largest banks - is the most compelling.

Barclays, which picked up part of the Lehman Brothers operation after it imploded, said it would shed 7,000 jobs at its investment bank over the next two years, while cutting both investment bank leverage and risk-weighted assets by about half. It also plans to sell retail banking operations in mainland Europe, and will create a "bad bank" to hold US$195 billion of risk-weighted assets from Europe and its investment bank.