Barclays to cut another 1,000 jobs as profits slide

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The Independent Online
BARCLAYS, the high-street banking giant, yesterday announced that it is to cut another 1,000 jobs as it beat City forecasts with a smaller- than-expected fall of 21 per cent in first-half profits to pounds 970m.

The half saw a dramatic turnaround at Barclays Capital, the bank's bond and foreign exchange business, following the hefty losses that precipitated the departure of the bank's chief executive, Martin Taylor, last year.

The job cuts, which fall mainly in Barclays' international retail operations, come on top of the 6,000 UK job losses announced in May. They come a week after Matt Barrett, the chairman and chief executive of Canada's Bank of Montreal, was appointed Barclays' new chief executive. Most of the cuts will be in Africa where Barclays employs 8,000, mainly in Zimbabwe and Kenya.

Sir Peter Middleton, Barclays chairman and chief executive, said: "Being efficient is a permanent part of life, and the programmes to contain and reduce costs will continue over the next two years." He said: "Costs are the bedrock on which returns to shareholders manifest themselves."

Sir Peter, who hands over the chief executive's baton to Mr Barrett in October, said he was setting the group a target of doubling profits over the next five years. "I expect to get there in four," he said. Sir Peter will stay on as chairman.

To pay for the costs associated with the fresh round of cuts, Barclays has set aside another pounds 45m in provisions, on top of the pounds 300m required to finance the earlier round of 6,000 cuts announced for this year.

Sir Peter said the provision was lower than the pounds 400m anticipated when he made the initial announcement in May as more people than expected had opted for early retirement. Barclays expects savings of pounds 200m a year as a result of the cutbacks.

With the benefit of the cost reduction programme starting to come through in the second half, Sir Peter was confident of meeting the target he set in February of holding costs this year at the 1998 level of pounds 4.8bn, in spite of a slight rise in first-half costs to pounds 2.39bn. This increase, he said, reflected higher volumes of business across the group.

The job-related provisions, and a pounds 140m write-back of goodwill after the failure of Merck Fink, the German bank, this year, were the main reasons for the first-half earnings fall. Stripping these out, Barclays showed an operating profit of pounds 1.43bn, up 6 per cent on the half last year and more than double the pounds 620m Barclays made in the second half of last year following the Russian bond market collapse.

Growth in retail operations was strong. But the corporate bank saw profits decline from pounds 544m to pounds 458m as the result of higher net bad debt provisions.

Analysts were concerned at the extent to which Barclays' results were boosted by dealing profits, which surged 64 per cent to pounds 325m. Total bad debt provision rose by pounds 191m to pounds 320m.