The jump in profits, which more than tripled last year's interim figures, surprised the City yesterday and drew calls from banking unions and consumer groups to end the cuts. Barclays is now forecast to make at least pounds 2bn profit for the whole of 1994.
Martin Taylor, Barclays' new chief executive, presenting his first set of results, said that people had got used to the bank making 'lousy returns', and that Barclays would continue cutting jobs and turning down unattractive loan proposals in order to rebuild the business. 'They have forgotten banks are a business and are supposed to make a profit.'
He said the bank was sticking to the target of 5,000 redundancies over 1994-95 and there may be more after that.
That drew an angry reaction from the Consumers' Association and from Bifu, the banking union, which urged Barclays to spend the profits on jobs. Noel Howell, a Bifu spokesman, said: 'It's crazy what they're doing. They're laying off 5,000 people but scouring the country to fill the holes left in the branches. They're taking on agency workers, casuals, even students. They've shut a third of the branches since the early 1980s.
'What Martin Taylor seems to forget is that it is the customer that counts, and who will suffer from this decline in service.'
Mr Taylor and Andrew Buxton, chairman of the group, said service to customers had been improved by a big retraining programme. There were no plans to reintroduce charges for current accounts in credit. Personal account charges have been frozen for 1994.
But a spokeswoman for the Consumers' Association said the huge profits 'add insult to injury for thousands of customers who have suffered poor service and too high charges. It's high time for the profits to be ploughed back into giving its customers a reasonable and fair service.'
Barclays has shed 16,000 jobs from its branch network since 1991, and reduced the number of branches from just under 3,000 in the early 1980s to 2,100 today; 12 more will close this year. Mr Howell said many communities had been left without a local bank.
He added: 'It looks like the banks' campaign of the 1960s and 1970s to win over the 'great unbanked' has now gone into
In the late 1980s Barclays' view was that biggest was best. Its UK staff peaked at 88,300 and lending to property and construction companies soared. Then the UK plunged into recession and Barclays had to set aside pounds 2bn in 1992 against possible bad loans.
All its competitors started to cut jobs and Barclays has reduced its head count by 22 per cent since 1988, while Lloyds made a 28 per cent reduction in the same period.
The high street banks have enjoyed a dramatic revival in profits this year as the British economy has recovered. National Westminster announced an 83 per cent rise in half-year profits to pounds 767m last week, while Lloyds' profits rose a fifth to pounds 605m.
The improving health of UK companies meant the amount Barclays had to set aside against possible bad loans in the first half of 1994 plummeted to pounds 358m, a third of the figure for the same period last year. That enabled it to triple profits to pounds 1,036m and declare a half-year dividend to shareholders up 23 per cent to 8p per share. The City was delighted, and Barclays' shares rose 4p yesterday to 568p.
Focus on cost-cutting, page 25
View from City Road, page 27