‘Barclays may soon resemble the Emirates Stadium with 20 minutes left to play - there will be over 20,000 empty seats.’
This somewhat unflattering reference to Barclays and possibly Arsenal football club, came from Investec Securities analyst Ian Gordon on news the lender was planning to cutting 14,000 jobs this year, half of which will be in investment banking. In total 19,000 jobs will go by 2016, 10,000 of which will be in the UK.
In a huge strategic overhaul of its business, Barclays is also planning to shut most of its Asian operations created by former chief executive Bob Diamond.
It its new form the bank will focus on four key areas – personal and corporate banking, which is home to its wealth business and Barclaycard and Africa bank, along with a smaller more focused investment bank offer banking services, equities and ‘certain macro products’.
‘This is a bold simplification of Barclays. We will be a focused international bank, operating only in area where we have capability, scale and competitive advantage,’ Barclays chief Antony Jenkins told the stockmarket.
Drastic action was needed after a dreadful trading update earlier this week underlined the slump in its investment division.
Sarcasm aside, the news prompted Gordon to reiterate his bullish stance on Barclays as he issued a fresh buy note with a 243p price target. At 12pm shares had gained 4.9% to stand at 255p.
‘Barclays is already low-risk profitable bank, but today’s “reset” is about rightsizing the bank to reflect a smaller addressable investment bank revenue pool and to deliver improved/sustainable returns,' Gordon said.
Citi is more bullish, slapping a £3.15 price target on Barclays as it described the strategic update as ‘sensible; not sensational’.
‘We believe the revised strategy is sensible and should be well received,’ Citi analysts Andrew Coombs and Ronit Ghose said.
‘While the updated financial targets are broadly consistent with our existing estimates, we think the shift in business mix from investment banking towards retail & commercial could potentially lead to a re-rating in Barclays’ shares.’
Comments like these suggest Barclays has every chance of hanging on to its Champions League status for the next few years.