Barclays boss Antony Jenkins wields the axe – but hails 'wise' rise in bonuses

Associate Business editor

The Barclays chief executive, Antony Jenkins, insisted yesterday that his controversial decision to increase bonuses despite falling profits was "a wise investment" as the City hailed a cost-cutting plan that will lead to the loss of 19,000 jobs over three years.

Mr Jenkins said the bonus move had stemmed the flow of departures from Barclays' US investment bank and dismissed fears of an exodus from those parts of it that the bank wants to keep in the wake of the departure of the top deal maker Skip McGee as its American chief.

Large parts of the bank's operations in the City and on Wall Street are facing the axe, with 2,000 extra job losses on top of the 12,000 already announced this year. Much of the old Barclays Capital built up by Mr Jenkins' predecessor, Bob Diamond, is now slated for closure. Between 8,000 and 8,5000 redundancies will be in the UK, and more branch closures are likely as customers increasingly bank electronically.

A further 5,000 jobs are slated for the axe next year and in 2016, and the bank is creating a "bad bank" to handle the run-off of £115bn of assets under the former co-head of investment banking Eric Bommensath. He has been told to get the figure down to £50bn by the end of 2016, with Barclays aiming to slim down its investment bank so it accounts for around 30 per cent of the group's assets, against the current 50 per cent.

All of Barclays' retail banking operations in Italy, France, Spain and Portugal, and some corporate and Barclaycard assets, will also be shifted into the bad bank. Some could be sold or floated off. Large parts of the fixed-income, currencies and commodities (FICC) business will be shut down in the wake of tough new regulations, particularly in the US, for derivatives trades.

Mr Jenkins said that the moves, outlined in his second strategic review in his two years in the top job, would ensure that shareholders receive a bigger cut of the bank's earnings than at present, with a target set of paying 40 to 50 per cent of them as dividends.

But he was unrepentant on the bonus hikes, which prompted a storm of criticism at a heated annual meeting last month: "What we have seen is that the money we have invested in paying higher bonuses is doing the job of protecting people within the investment bank at manning director level. The decision we took last year has proved a wise investment." He has nonetheless pledged that the move will not be repeated.

Mr Jenkins said the scaling down of the investment bank was pushed by "regulatory change which has become apparent only in the last year". "Many of the activities just don't make sense any more and some of the economic factors that drove growth are not going to be present."

Investors piled into the shares, which rose 5.23 per cent to 256.03p.

Ian Gordon, an analyst at Investec, said: "Barclays may soon resemble the Emirates Stadium [Arsenal's home ground] with 20 minutes left to play: there will be over 20,000 empty seats. Barclays is already a low-risk, profitable bank, but today's 'reset' is about rightsizing the bank to reflect a smaller... investment bank revenue pool and to deliver improved/sustainable returns. The creation of a 'bad bank' is merely packaging."

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Graduate Recruitment Resourcer

£20000 - £22500 per annum + OTE £30K: SThree: SThree Group have been well esta...

Ashdown Group: Treasury Assistant - Accounts Assistant - London, Old Street

£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Business Analyst - Financial Services - City, London

£50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...

SThree: Trainee Recruitment Consultant

£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...

Day In a Page

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

How a costume drama became a Sunday night staple
Miliband promises no stamp duty for first-time buyers as he pushes Tories on housing

Miliband promises no stamp duty for first-time buyers

Labour leader pushes Tories on housing
Aviation history is littered with grand failures - from the the Bristol Brabazon to Concorde - but what went wrong with the SuperJumbo?

Aviation history is littered with grand failures

But what went wrong with the SuperJumbo?
Fear of Putin, Islamists and immigration is giving rise to a new generation of Soviet-style 'iron curtains' right across Europe

Fortress Europe?

Fear of Putin, Islamists and immigration is giving rise to a new generation of 'iron curtains'
Never mind what you're wearing, it's what you're reclining on

Never mind what you're wearing

It's what you're reclining on that matters
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence