Barclays to cut 3,700 jobs after 'reputational damage'
- Published: 12/02/2013 at 03:44 PM
- Online news:
Barclays will cut at least 3,700 jobs this year and slash costs, the scandal-hit bank announced on Tuesday as it also revealed that it had plunged into an annual net loss amid the Libor rate-rigging crisis.
A Barclays bank branch covered in scaffolding is pictured in central London on February 11, 2013. Barclays will cut at least 3,700 jobs this year and slash costs, the scandal-hit bank announced on Tuesday as it also revealed that it had plunged into an annual net loss amid the Libor rate-rigging crisis.
The British bank said in a statement that it would "reduce headcount by at least 3,700 across the group, including 1,800 in the Corporate & Investment Bank and 1,900 in Europe Retail and Business Banking." Barclays employs 140,000 staff.
The bank reported a loss after tax of pound sterling1.04 billion ($1.63 billion, 1.22 billion euros) for 2012 compared with a net profit of pound sterling3.0 billion in 2011 -- news brushed aside by the market as Barclays' share price soared on Tuesday.
"There is no doubt that 2012 was a difficult year for Barclays and the entire banking sector," said chief executive Antony Jenkins, who was brought in to shake up the bank in the wake of the Libor scandal that has rocked other lenders.
"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," he said.
"Barclays was not immune from the impact of these trends, and we suffered reputational damage in 2012 as a consequence. Change is needed both in our industry and at Barclays," Jenkins added in a statement.
Jenkins ordered a strategic review after replacing Bob Diamond as chief executive five months ago and after the bank was fined $450 million (336 million euros) by British and US regulators for attempted manipulation of Libor and Euribor interbank rates.
As well as deciding to scrap thousands of jobs, Jenkins on Tuesday said that he would slash the bank's costs by pound sterling1.7 billion in 2015.
Barclays said that as a result of the job cuts, it would incur a restructuring charge of close to pound sterling500 million in the first quarter of 2013.
It added that going forward the bank would focus its investment projects in Britain, the United States and Africa, "whilst maintaining an appropriate presence across Europe and Asia."
Barclays would set out also to "provide greater disclosure and transparency" around its financial performance.
Earlier this month, Jenkins announced that he would give up his 2012 bonus, reported to have been at least pound sterling1.0 million, because of the bank's problems.
Barclays last week said it had set aside another pound sterling1.0 billion to cover compensation for mis-selling credit insurance and interest rate hedging products, which comes on top of the Libor fallout.
In another blow, Barclays recently revealed that Britain's Serious Fraud Office was probing payments made to Qatar Holding, which the bank tapped for funds at the height of the 2008 financial crisis to avoid part-nationalisation.
Despite its problems, Barclays' shares were showing a sizeable gain of 4.38 percent at 314.6 pence in Tuesday trading on London's benchmark FTSE 100 index, which was up 0.28 percent at 6,294.24 points.
"In all, the strategy update and results are largely in line with expectations," said Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers.
"A series of legacy issues such as Libor continue to overhang, whilst increased regulatory and capital requirements continue to reduce prospective investment returns going forward."
Libor, or London Interbank Offered Rate, is a flagship instrument used all over the world, affecting what banks, businesses and individuals pay to borrow money. Euribor is the eurozone equivalent.
State-rescued Royal Bank of Scotland last week said it would pay fines totalling $612 million to US and British regulators to settle allegations of Libor interest rate rigging -- becoming the third bank to admit its part in the affair after Barclays and Swiss lender UBS.
On Monday, RBS chief executive Stephen Hester defended his right to a bonus despite the bank's huge fines.
British taxpayers own 81 percent of RBS after it was bailed out at the height of the global financial crisis in 2008 with pound sterling45.5 billion of taxpayers' cash.
About the author
- Writer: AFP
Position: News agency