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


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The Independent Online

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."