Barclays to cut 19,000 jobs over three years

Chief executive Antony Jenkins: "A simpler Barclays"

Barclays is to cut 19,000 jobs by 2016, with more than 9,000 to go in the UK, the bank has said.

As part of a new strategy, the investment part of the bank will lose about 7,000 jobs by the end of 2016.

Barclays' investment bank has been hit by a slowdown in the demand for government and company debt.

Barclays will also set up a "bad bank" which will eventually sell or run down £115bn of non-core operations.

These include £90bn of investment bank assets and all of its European retail banking operations, amounting to £16bn of assets.

Retail operations

Retail banking in Spain, Portugal, Italy and France will be shifted to non-core operations.

"Bad banks" have been used by a number of institutions since the global financial crisis as a way of ring-fencing risky loans and assets.

The carve-up will give greater prominence to Barclays' retail operations in the UK, its Barclaycard credit card arm and its African business.

"This is a bold simplification of Barclays," said chief executive Antony Jenkins.

"We will be a focused international bank, operating only in areas where we have capability, scale and competitive advantage."

Barclays job losses

19,000

Jobs to be cut by 2016

  • Around 9,000 in the UK

    Current staff numbers

  • 38,800 retail banking

  • 26,000 investment banking

GETTY

BBC Business Editor Kamal Ahmed said on Wednesday that Barclays could close up to 400 branches over the next few years, but that an announcement about branch closures was not imminent.

In its statement on Thursday, Barclays made no mention of any retail bank branch closures.

Welcome back retail banking.

Antony Jenkins has finally followed the lead of the Royal Bank of Scotland, UBS and many other global banks in cutting its investment banking activities and focusing on the bread and butter - customer accounts, wealth management, Barclaycard and business lending.

After a plunge in profits in fixed income products (used by companies to finance debt) and commodities trading, Mr Jenkins will focus on the bits of the investment bank that are left on equities and mergers and acquisitions advice. As Pfizer and AstraZeneca shows, deal fever is coming back.

The 5% jump in the share price shows what shareholders think of Mr Jenkins' plan. Fixed income and commodities were simply too expensive and too cyclical for a bank weighed down by the requirement to hold more capital as a buffer against such activities.

Of course, Mr Jenkins will now be tested on execution. The investment bank, once the job losses have gone through, will have to show a better cost to income ratio. The European businesses will need to be run down or sold. The retail bank will have to show continued progress. The new Africa division will need strong management.

Mr Jenkins wants a simpler bank.

Simpler also means there are fewer places to hide if things go wrong.

The retail banking arm employs 32,900 people in the UK, and around 5,900 in Europe.

Job losses

The majority of the job losses will happen this year, with 14,000 jobs to be cut across the group in 2014.

The number is higher than the 10,000 to 12,000 global jobs that the bank previously said it wanted to cut this year.

The investment bank, which employs around 26,000 people, will lose 2,000 posts this year and a further 5,000 by the end of 2016.

In the first quarter of this year Barclay's profits fell 5%, after its investment banking business was hit by a 28% slump in revenue.

Revenue from trading in currencies, bonds and commodities dropped 41% to £1.23bn.

Chancellor George Osborne told the BBC that job losses at Barclays were regrettable, but Barclays wanted to be "focused on its customers".

"Part of our long-term economic plan is having British banks that aren't bailed out by the taxpayer, but instead support the British economy, lend to small businesses, and lend to families," he said.

"Now Barclays are seeking to build a bank that is focused on its customers, and of course, that means some changes."

Shares rise

In afternoon trading on Thursday, Barclays shares were up by more than 7%.

Richard Hunter, head of equities at Hargreaves Lansdown stockbrokers, said:

"The news has been well received, although this is unquestionably a long term game," he said.

"The separation of non-core assets, a continued reduction of costs and a streamlining and focus on more profitable operations all seem to make strategic sense."

However, the change of direction for Barclays needs to be implemented both quickly and carefully "since investors' patience on the banking sector as a whole is showing signs of wearing thin after some years of rapid change," he added.

Osborne: "Any job loss is regrettable but we want banks supporting the British economy"

Investment banks have shed staff as investors have moved away from government and company debt in the form of bonds. Commodity and currency trading has also taken a hit.

Several investment banks saw income drop in the first quarter after a grim start to the year for bond and interest rate trading.

For example, revenue at HSBC's investment bank fell 4% amid "challenging" market conditions, the bank said.

Do you work for Barclays? Are you affected by the job cuts? You can send an email to haveyoursay@bbc.co.uk adding 'Barclays' in the subject line.

Or you can contact us using the form below.

If you are happy to be contacted by a BBC journalist please leave a telephone number that we can contact you on. In some cases a selection of your comments will be published, displaying your name as you provide it and location, unless you state otherwise. Your contact details will never be published. When sending us pictures, video or eyewitness accounts at no time should you endanger yourself or others, take any unnecessary risks or infringe any laws. Please ensure you have read the terms and conditions.

Terms and conditions

More on This Story

The BBC is not responsible for the content of external Internet sites

More Business stories

RSS

BBC Business Live

  1.  
    INTEREST RATES Via Email Laith Khalaf Senior Analyst, Hargreaves Lansdown

    "The plot twists in the interest rate saga are coming thick and fast... It may yet be premature to start counting your chickens however. The last time the committee vote was split was in July 2011, shortly before the eurozone crisis kicked interest rate rises into the long grass. Yesterday's inflation data and continuing anaemic wage growth may also put somewhat of a dampener on the enthusiasm for rate rises."

     
  2.  
    COGNAC SALES 11:04:
    COGNAC

    Sales of cognac fell in the past year after a drop in sales to China, according to France's trade body the National Interprofessional Bureau of Cognac. An anti-corruption purge in China reduced consumption of luxury goods by officials. Sales for the year to August fell 10.2% by value.

     
  3.  
    MORTGAGES 10:51:

    More from the Council of Mortgage Lenders on those strong lending figures for July. Mortgage activity has remained "robust" despite the introduction of tougher mortgage lending rules in April, it said. Property sales in the first six months of 2014 were up 25% from a year earlier, it added, but "we expect tha0t intensifying affordability pressures could start to dampen this upwards trend".

     
  4.  
    INTEREST RATES Via Email Peter Hemington Partner at BDO

    "There are still big question marks for businesses on when the rise might come. Businesses cannot plan for growth on the basis of vague or conflicting statements - policy makers can do more to provide certainty for businesses, enabling them to make informed decisions for the future."

     
  5.  
    MORTGAGES 10:33:
    Mortgage form

    Mortgage lending hit a near six-year high in July, according to the latest figures from the Council of Mortgage Lenders. Gross mortgage lending rose to £19.1bn last month, the CML said, the highest figure since August 2008. The figure was up 7% from the previous month and 15% higher than a year earlier.

     
  6.  
    INTEREST RATES 10:23: BBC News Channel
    Michael Saunders

    A "fairly major step" is how Michael Saunders, chief economist at Citigroup, describes the news of the split vote on the MPC. But he says we shouldn't fear a rate rise as the economy is in good shape. "Rates will go up in the next six months or so... and will steadily rise from there," he tells the BBC. The pound may rally further as rates rise because of sterling's "incredibly weak" starting point, he adds.

     
  7.  
  8.  
    POUND REACTION 10:10:
    Pound-Dollar

    News of the split vote on the MPC has sent the value of the pound higher, as the minutes suggest a rate rise could happen that much sooner. Against the dollar, sterling climbed to $1.6680, which was up 0.3% for the day.

     
  9.  
    STANDARD CHARTERED Ian Gordon Banking analyst, Investec

    "There appears to be no suggestion by the New York Department of Financial Services of any wrongdoing or breach of regulations by Standard Chartered. What it claims to have identified is a deficiency in a surveillance system at Standard Chartered's New York branch to identify and/or flag certain "high risk" transactions... We estimate a 1-2% adverse earnings impact."

     
  10.  
    INTEREST RATES 09:52:

    For the majority of the Monetary Policy Committee, "there remained insufficient evidence of inflationary pressures to justify an immediate increase in Bank Rate", the minutes showed. They noted that the latest Inflation Report had inflation reaching the 2% target only at the end of a three-year forecast period. Economic growth is likely to slow slightly, and wage growth remains weak, they said.

     
  11.  
    INTEREST RATES 09:44:

    For Martin Weale and Ian McCafferty, "the continuing rapid fall in unemployment alongside survey evidence of tightening in the labour market created a prospect that wage growth would pick up", the MPC minutes show. "Since monetary policy, too, could be expected to operate only with a lag, it was desirable to anticipate labour market pressures by raising Bank Rate in advance of them."

     
  12.  
    INTEREST RATES 09:32:

    The MPC minutes show that Martin Weale and Ian McCafferty both voted to raise interest rates to 0.75% from 0.5%. It's the first time the MPC's vote has not been unanimous for more than three years.

     
  13.  
    INTEREST RATES Breaking News
    Bank of England

    The Bank of England's Monetary Policy Committee voted 7-2 in favour of holding interest rates at 0.5% earlier this month, minutes have shown.

     
  14.  
    MARKET UPDATE 09:22:

    Shares in Balfour Beatty have fallen more than 6% after the company rejected the latest takeover proposal from rival Carillion. Glencore shares are up 0.4% after the commodity trader and miner reported better-than-expected first half profits.

     
  15.  
    MORTGAGES 09:13: BBC Breakfast
    BBC Breakfast

    The expectation that interest rates are going to start rising in the coming months has led to a surge in homeowners remortgaging. The Money Advice Bureau says there was a 21% spike in remortgaging applications last month. Kerry Rowling from Marble Mortgages told BBC Breakfast it's worthwhile putting the time in to find a good rate. And she says there are still many fee-free deals around.

     
  16.  
    FRENCH ECONOMY 09:02: BBC Radio 4

    The Today programme has been looking at why the French economy has ground to halt, with zero growth over the past six months. "The main drag on French growth is the lack of investment," says Eric Chaney, chief economist at AXA Group. "Companies in France do not want to invest because of very high taxation, very tough regulation and a lot of uncertainty about government policy."

     
  17.  
    AMAZON ROW 08:48: Radio 5 live
    Amazon screen shot

    Amazon has been criticised recently over its treatment of publishers. Economist John Kay says on Wake Up to Money the traditional publishing business is on the way out. "It used to be a complicated business getting a book into the hands [of the public]," he says, "it's not any more." Authors will get more proceeds from the books, he says, and Amazon won't have a monopoly.

     
  18.  
    GLENCORE BUYBACK 08:39:

    Commodity trader and miner Glencore has said it will buy back $1bn of shares over the next six months. The company also reported an 8% rise in first half earnings to $6.5bn (£3.9bn), beating analysts' estimates.

     
  19.  
    MARKET UPDATE 08:24:

    After two days of strong gains, the main European stock markets have inched lower in early trade.

    • The FTSE 100 is down 11.11 points at 6,768.20
    • Germany's Dax index is 14.86 points lower at 9,319.42
    • In France, the Cac 40 is down 9.57 points at 4,244.88
     
  20.  
    ARGENTINA DEBT 08:20:
    Cristina Fernandez

    President Cristina Fernandez has proposed laws that will push bondholders to swap defaulted debt for new bonds governed by Argentine law, to try to avoid a US ruling that prevented her government from paying some creditors. Argentina entered default last month after a New York court blocked an interest payment of $539m owed to holders of bonds issued under US laws that was restructured after the country's record 2002 default.

     
  21.  
    INTEREST RATES 08:02: BBC Radio 4

    The Bank of England's Monetary Policy Committee (MPC) has voted unanimously to hold rates at 0.5% for the past three years. Peter Warburton, who sits on a 'shadow' MPC, organised by the Institute for Economic Affairs, tells the Today programme that it looks like the consensus is beginning to crumble, although the latest MPC minutes could still show a 9-0 vote in August.

     
  22.  
    Via Twitter Adam Parsons Business Correspondent

    tweets: "Diego Hernández to become Chief Executive Officer of FTSE100 miner Antofagasta"

     
  23.  
    HEINEKEN RESULTS 07:35:
    beer

    Heineken beat analysts' forecasts for its first-half results, although along with Carlsberg it said it sold less in Russia. The Central and Eastern Europe business was hit by bad weather and floods. Operating profit before one-off items rose 9.6% in the first six months of the year to 1.45bn euros ($1.93bn; £1.16bn),

     
  24.  
    CARLSBERG RESULTS 07:23:
    beer

    Danish brewer Carlsberg has said annual profits will drop because of western relations with Russia. The country generates 35% of operating profit but Russia could enter recession this year. "The overall performance in the second quarter looks fine, but they are downgrading their guidance due to the macroeconomic uncertainty in the Eastern European region. So it is a mixed bag," analyst Morten Imsgard from Sydbank said.

     
  25.  
    BALFOUR BEATTY 07:18:

    Balfour Balfour said it rejected Carillion's latest offer because it failed to address "two key concerns". It said there were "considerable risks" associated with the proposed business plan. It also objected to Carillion's intention to halt the planned sale of Balfour's Parsons Brinckerhoff business in the US, "at a point when it is reaching a successful conclusion".

     
  26.  
    BALFOUR BEATTY 07:08:
    Balfour Beatty worker

    Balfour Beatty has rejected the latest takeover bid from rival Carillion. The offer was sweetened on Tuesday for the third time, valuing Balfour at more than £2bn. But Balfour said the proposal was "not in the best interests" of its shareholders.

     
  27.  
    BHP BILLITON 06:57: BBC Radio 4
    BHP Billiton logo

    On Tuesday, mining giant BHP Billiton announced plans to spin-off billions of dollars worth of assets into a new company. Elaine Coverley, head of equity research at Brewin Dolphin, told the Today programme that it's a sign that shareholders in the sector are demanding more discipline from management and seeking better dividends.

     
  28.  
    STANDARD CHARTERED 06:44: Radio 5 live
    Standard Chartered

    Elaine Coverley, head of equity research at Brewin Dolphin is on Wake Up to Money, this time talking about Standard Chartered. Standard Chartered has agreed to pay $300m (£180m) to New York's top banking regulator for failing to improve its money laundering controls. "It's a blow," she says. "In the past the management were very well respected."

     
  29.  
    JAPAN EXPORTS 06:31:
    Tokyo port

    Japan's exports grew in July for the first time in three months, figures have shown. Exports were up 3.9% from a year ago thanks to higher shipments of cars and electric machinery. However, imports rose by 2.3%, largely due to purchases of oil and gas. This meant the trade deficit came in at a larger-than-expected 964.0bn yen ($9.4bn; £5.6bn) for the month.

     
  30.  
    BALFOUR MERGER 06:16: Radio 5 live

    Elaine Coverley, head of equity research at Brewin Dolphin is on Wake Up to Money. Carillion is back with improved terms to buy Balfour Beatty. "It is getting more hostile," she says. Balfour Beatty shareholders "need to petition the board to look at this offer much more closely", she says.

     
  31.  
    INTEREST RATES 06:10: Radio 5 live
    Bank of England

    A rise in interest rates is "long overdue", economist Peter Warburton tells Wake Up to Money. The minutes from August's meeting of the Bank of England's Monetary Policy Committee are out later and could show some members favoured a rate rise. Mr Warburton thinks several economic indicators suggest rates should already have gone up.

     
  32.  
    PALLADIUM PRICES 06:02: Radio 5 live

    Jim Slade, a director of European Exhaust & Catalyst, is on Wake Up to Money talking about palladium, which is used in catalytic converters. The price of palladium has risen by 25% this year. "There's a lot of debate about Russia and whether they have a huge stockpile or whether it's depleted," he says.

     
  33.  
    06:00: Nick Edser, Business reporter

    Good morning. You can email us at bizlivepage@bbc.co.uk and tweet us at @bbcbusiness.

     
  34.  
    06:00: Howard Mustoe Business reporter

    Hello. Today we can look forward to minutes from the Bank of England's Monetary Policy Committee, plus company results and analysis. Stay tuned.

     

Features

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.