With euro zone banks firmly in the spotlight Friday ahead of the publication of regional stress testing results, the head of one of Britain's largest banks told CNBC that the sector was in a difficult position.
"The European banking sector is challenged," Barclays CEO Jes Staley told CNBC on Friday ahead of the stress test results.
"If you look at the top 12 banks across Europe, on average they're trading at a 50 percent discount to book value - that's not healthy for the financial system and that's not healthy for the European economy."
Staley's comments came after the British bank reported a 21 percent drop in first-half group profit before tax as the costs of disposing its non-core business weighed on its own earnings.
Statutory group profit before tax was £2.06 billion ($2.71 billion), down 21 percent from the same period a year ago.
The bank said that its core business made a pretax profit of £3.97 billion, up 19 percent year-on-year, but that its non-core business had made a £1.9 billion loss, mainly due to a cost of £372 million related to the disposal of its French business.
It stressed that as it wound up non-core assets, its earnings would improve.
Barclays' share price opened up 1.89 percent in Friday trading. Staley told CNBC that he was looking forward to "clean air" in 2017 after its non-core business was wound-up.
"Our core business of the transatlantic consumer, corporate and investment bank generated a return on tangible equity (ROTE) of 11 percent, that's one of the best returns of any bank in the world, so our core business did quite well" he said.
"The second part of our strategy this year is to accelerate the closure of non-core so that we go into 2017 and we begin to have clean air to prosecute the strategy of Barclays which we feel very good about."
Despite his optimism, Staley conceded that the wider banking environment still posed challenges.
"The markets are challenging, the capital markets are going through a significant restructuring and banks are also going through a significant restructuring, using more capital, being more liquid, which is all making the financial system much safer but (it) does pose a challenge in terms of profitability. But at 11 percent ROTE, we think Barclays is in a very good place right now."
He said that the cost of its non-core business would be down to £400 million-£500 million in 2017 and that the business remained on track to meet its core cost target of £12.8 billion for 2016.