Barclays has announced 7,000 job cuts in its investment bank as its cuts the troubled division down from holding more than half of the company’s risk-weighted assets to below a third.
The decision means that the company’s overall target for job losses this year will rise from 12,000 to 14,000, following days of rumours of wholesale departures from its US division after the exit of senior banker Skip McGee. A third of the jobs lost within the investment bank will be UK-based.
Pay policies in the investment bank were a source of anger at Barclay’s recent AGM, with shareholders berating executives over ‘Manchester United’ pay for ‘Colchester United’ performance.
At 9.30 Barclays was at the top of the FTSE 100 leader board, up 5.24% at 256p.
‘This is a bold simplification of Barclays. We will be a focused international bank, operating only in areas where we have capability, scale and competitive advantage,’ said chief executive Antony Jenkins.
‘In the future, Barclays will be leaner, stronger, much better balanced and well positioned to deliver lower volatility, higher returns, and growth.’
Writing in the FT last week, former Cazenove chief Robert Pickering warned about the flawed logic of bank bosses allowing themselves to be held hostage by high-paid investment banking staff.
‘I cannot think of a single example of a well-established firm ceasing to exist because of staff defections, although there are plenty of examples of firms going bust in bull markets because of poor management and excessive leverage,’ wrote Pickering.
'The problem obviously is that the management of investment banks, right up to the top, have an interest in perpetuating the myth of the death spiral in order to justify high pay.'
The restructuring of the group will include the creation of ‘bad bank’ Barclays Non-Core to hold £115 billion in non-performing assets.
The anouncement will add £800 million of costs to Jenkins' attempt to remould the bank around more ethical principles, on top of £2.7 billion already announced.