Barclays' investment bank profits halve
Tuesday 06 May 2014
Barclays chief executive Antony Jenkins is set to announce sweeping changes after profits at its investment bank division halved.
Barclays has cut 450 managing director or director jobs in the investment banks this year and more are expected to go as Jenkins reveals plans to quit swathes of the business on Thursday.
Fixed income, currencies and commodities took the brunt of the damage in the first quarter as Barclays lost ground to rivals and overall trading volumes were lower.
The bank has already cut back in several areas including commodities.
Finance director Tushar Morzaria admitted the bank had lost investment bankers, particularly in New York where it took over Lehman Brothers at the height of the financial crisis in 2008.
He said: “The review may or may not have prompted people to move on. It may also have affected trade, which was worse than some of our rivals in some areas.”
Last week the chief executive of Barclays America, Skip McGee, quit and there are reports that the head of mergers and acquisitions Paul Parker is set to leave.
Analysts said the investment bank’s figures were even worse than expected with FICC income down 48 per cent. Barclays shares fell 10.4p, or 4 per cent, to 248.1p.
Morzaria pointed out that the areas of investment banking the group plans to concentrate on — advisory and equities — had a good quarter with income broadly flat. But he said in FICC the poor trading of the first quarter had continued through April.
The bank said: “We continue to be cautious about the trading environment in which we operate and as a consequence we remain focused on structurally reducing the cost base in order to improve returns.”
Barclays’ pre-tax profits fell 5 per cent to £1.7 billion in the three months to end March with all divisions except the investment bank showing growth. Retail banking profits were up 20 per cent, Africa up 25 per cent, Barclaycard 17 per cent and corporate banking up 42 per cent.
Only the European retail banking arm, which is widely expected to be sold off or closed, continued to lose money.
Jenkins said of Thursday’s strategy update: “This plan will address issues underlying the performance challenges we have recently experienced, including positioning the investment bank for the new operating and regulatory environment.”
James Chappell, analyst at Berenberg, said he would like to see Barclays “lay out a path to separate the investment bank, but doubt whether management will go as far”.
- 1 Kermit the Frog has a new girlfriend named Denise
- 2 The excuses your boss is most likely to believe when you call in sick
- 3 Moscow voted the world's unfriendliest city
- 4 I'm pansexual – here are the five biggest misconceptions about my sexuality
- 5 More than 11,000 Icelanders offer to house Syrian refugees to help European crisis
The one chart that shows how George Osborne is almost certainly going to be our next Prime Minister
The excuses your boss is most likely to believe when you call in sick
Three-year-old ultra-Orthodox Jewish children told 'the non-Jews' are 'evil' in worksheet produced by London school
Bono's group has made more money from Facebook investment than from all his music
Wikipedia rocked by 'rogue editors' blackmail scam targeting small businesses and celebrities
Climate change: 2015 will be the hottest year on record 'by a mile', experts say
Jeremy Corbyn calls Osama bin Laden's killing a 'tragedy' - but was it taken out of context?
Tony Blair attacks Jeremy Corbyn's 'Alice In Wonderland' politics
Theresa May says migrants should be banned from entering the UK unless they have jobs lined up
Iain Duncan Smith 'should resign over disability benefit death figures', says Jeremy Corbyn
If you're not already angry about the refugee crisis, here's a history lesson to remind you why you really should be
iJobs Money & Business
£14000 - £16000 per annum: Recruitment Genius: This company was established in...
£20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...
£20000 - £25000 per annum + competitive: SThree: SThree are a global FTSE 250 ...
£20000 - £25000 per annum: Recruitment Genius: We are a vibrant and establishe...