BARCLAYS boss Antony Jenkins unveiled a cultural revolution at the group yesterday which will shrink its investment bank, slash 3,700 jobs and wipe £1.7 billion off costs.
The chief executive said the strategic overhaul was meant to clean up Barclays and drive longer-term earnings following a torrid year that included the Libor–fixing and payment protection insurance (PPI) mis-selling scandals.
“It will take years before people actually change their impression of us. I’m not daunted by that at all,” Jenkins, a retail banking veteran at Barclays, said. The job cuts will include 1,800 in corporate and investment banking and 1,900 in European and retail activities.
Jenkins said only a relatively small number of UK jobs would be affected, in the “low hundreds, or tens”. Its investment bankers would receive an average bonus of £54,100 for 2012, down 17 per cent on 2011. Bonuses across the bank will total £1.85bn, down 14 per cent on the year.
Aware of the reputational damage Barclays has suffered, Jenkins said the group was to close down its controversial tax avoidance business and cease speculative trading in soft commodities such as agricultural products. “There will be no return to doing things in the old way,” he said.
The bank would focus on investment in the UK, US and Africa, while BarCap’s equities and advisory businesses in mainland Europe and Asia would be cut back. Jenkins added that the bank would in future “focus on the mass affluent” in mainland Europe, leading to about 30 per cent – or 340 – of its branches in the region closing.
Jenkins, who succeeded Bob Diamond in the wake of the Libor scandal, said the bank aimed to slash £1.7bn from the cost base to £16.8bn in 2015. This excludes one-off costs of £2.7bn over three years.
Pre-tax profit in 2012 collapsed to £246 million from £5.8bn the previous year, after putting aside £1.6bn to compensate victims of loan insurance mis-selling, £850m for claims from small businesses wrongly sold complex interest rate hedging products, and other write-offs. Underlying profits lifted 26 per cent to £7.05bn. The total dividend is hoisted to 6p from 6.5p, courtesy of a proposed final payment of 3.5p.
Jenkins also cheered the City when he said that, from 2014, he planned “to give investors a bigger share of the income we generate”. Shares in Barclays, the biggest gainer on the FTSE 100 leaderboard, closed up 8.6 per cent, or 25.85p, at 327.35p – a two-year high.
Despite the cuts at the investment bank, Jenkins said the division remained integral to the company. Last year BarCap’s underlying profits surged 37 per cent to £4.06bn from £2.96bn, compared with a modest 4 per cent rise in underlying earnings to £1.5bn at Barclays’s UK high street business. Barclaycard profits jumped 25 per cent to £1.5bn from £1.2bn, while corporate banking profits rose to £551m from £204m.
Jenkins declined to comment on the ongoing probes by the Financial Services Authority and Serious Fraud Office into the commercial arrangements between Barclays and Qatari investors in two major fundraisings at the time of the 2008 financial crisis.