Barclays "bloodbath": 19,000 jobs cut, hundreds of branches to shut
08 May 2014
British banking giant Barclays Plc today said that it will eliminate 19,000 jobs by 2016 and shut hundreds of branches as CEO Antony Jenkins sets out plans to overhaul the bank after profits fell earlier this year.
The latest job cuts come after the British lender cut 7,650 jobs last year, as part of a restructuring to reduce annual costs by £1.7 billion by 2015.
The redundancies also come over and above the already 12,000 job cuts announced in February, which has now been increased to 14,000, bringing the total job cuts by 2016 to 19,000. (See: Barclays to eliminate 12,000 jobs after Q4 net loss widens)
More than half of the 19,000 job cuts in the current round will fall in the UK.
As part of its latest overhaul, the London-based lender, as speculated earlier, will cut 7,000 jobs from its investment banking division by 2016, including more than 2,000 in the UK, and plans to close 400 of its 16,000 branches. (See: Barclays to make big changes in investment banking, toss out speculators)
Income from its investment bank fell 28 per cent, largely because of a 41 per cent drop in fixed income, currencies and commodities (FICC).
The sharp fall in investment banking profits dragged down the rest of the group, as profits slipped 5 per cent to just under £1.7 billion.
Barclays, whose stock has declined by nearly 9 per cent over the last 12 months, will create a non-core division, or "bad bank" to take on £115 billion ($195 billion) of non-essential business in the investment banking side, which includes commodities, derivatives and some emerging markets products.
This also includes around £16 billion of assets from the bank's European retail operations.
Barclays also indicated that it may spin out its European retail operations via an initial public offering.
Jenkins replaced Bob Diamond who quit in the wake of the Libor rate rigging controversy, and is battling to repair Barclays' battered image. But he suffered a backlash after revealing that employees in the investment bank were paid £1.5 billion in bonuses last year despite profits plummeting.
Barclays had raised bonuses at its investment banking unit last year by 13 per cent to £1.6 billion, and paid £2.4 billion ($3.9 billion) across the bank as incentive awards.
Although profits at the retail bank soared by 20 per cent to £360 million in the first three months of the year, figures from City watchdog the Financial Conduct Authority last month ranked Barclays the most complained-about bank.
''We will be a focused international bank, operating only in areas where we have capability, scale and competitive advantage. In the future, Barclays will be leaner, stronger, much better balanced and well positioned to deliver lower volatility, higher returns, and growth,'' said Jenkins on the overhaul.
"My goal is unchanged: to create a Barclays that does business in the right way, with the right values, and delivers the returns that our shareholders deserve. However, the way in which we will achieve this is different,'' he added.
Barclays has been in the news for all the wrong reasons in recent times.
It has been accused along with other major banks, of involvement in rigging of benchmark Libor rates (See: Libor list exposes top Barclays executives).
In July last year US power regulator Federal Energy Regulatory Commission fined Barclays and four of its traders $453 million for manipulating power prices in California and other western markets between November 2006 and December 2008 (Barclays fined $453 mn for fudging US electricity markets).
An internal report prepared for the bank by investment banking attorney Anthony Salz in 2013, says that the lender put profit ahead of customers and let lending standards slip from the early 2000s (See: Barclays puts profit ahead of customers: review).