Barclays announces job cuts and transformation plan

Barclays said today that it is aiming to transform its business after a series of scandals rocked the bank and the wider industry.

New chief executive Antony Jenkins, who took over from Bob Diamond in August, said that Barclays is aiming to become the ‘go-to’ bank for all of its stakeholders – customers and clients, colleagues, investors and wider society.

The transformation plan comes as the bank attempts to rebuild its reputation in the wake of last year’s fine for attempting to rig the Libor interest rate, and industry-wide mis-selling scandals in the UK involving payment protection insurance and interest rate hedging products.

Barclays announced today a drop in pre-tax profit to GBP246m in 2012, from GBP5.9bn in 2011, after the bank recorded a GBP4.6bn charge against the value of its own debt and set aside GBP2.45bn for the cost of mis-selling compensation.

Reflecting on a difficult year for Barclays and the entire banking sector, Antony Jenkins said: “The behaviours which made headlines during the year stemmed from a period of 20 years in banking in which the sector became too aggressive, too focused on the short-term, and too disconnected from the needs of customers and clients, and wider society. Barclays was not immune from the impact of these trends, and we suffered reputational damage in 2012 as a consequence.”

Change is needed both at Barclays and in the industry as a whole, the chief executive added.

Following a strategic review, Barclays said today that it is aiming to reduce costs by GBP1.7bn and will be cutting 3,700 jobs across the business. The job reductions will result in a restructuring charge of close to GBP500m in the first quarter of 2013.

Primarily the job cuts will be made in the bank’s investment banking activities in Asia and its retail banking business in Europe. Very few of the job losses are expected to be in the UK.

In the future, Barclays intends to focus on activities that support customers and clients in geographic markets and businesses where the bank has scale and competitive advantage. Specifically, it will focus investment in the UK, the US and Africa, while maintaining a presence across Europe and Asia to support its global investment banking franchise.

Barclays’ European retail operations will be restructured to focus on the mass affluent customer segment and it will close its Structured Capital Markets business unit.

Investors responded positively to Barclays’ announcements, with shares in the bank rising to a 23-month high earlier today, Bloomberg reported.