City applauds Antony Jenkins' bid to restore Barclays' image

Chief executive's plans to restructure bank come at a cost of 3,700 jobs – and a £1.8bn bonuses payout provokes criticism

Barclays' shares were the biggest gainers on the FTSE 100 as the City cheered Antony Jenkins' pledge to transform the bank and hand nearly a third of its profits to shareholders.

But controversy still raged over bonuses, as the bank announced a £1.8bn payout across the group, nearly three-quarters of which goes to investment bankers, where the average payout was £55,000.

The plans to reshape the bank will come at the cost of 3,700 jobs, largely in Europe and Asia, as Mr Jenkins seeks to trim £1.7bn from the bank's cost base. He also confirmed plans to close the controversial Structured Capital Markets unit, which has been under fire for selling sophisticated tax avoidance schemes to clients, and trading in "soft" commodities such as food.

The decision will cost the bank £500m in revenue, but the businesses were deemed to pose too great a risk to the reputation of a bank battered by the Libor interest rate fixing scandal and the mis-selling of payment protection insurance policies. Mr Jenkins, formerly head of retail, said he "took responsibility" for the latter.

Another four other business lines will go because they are "uneconomic", while trading deemed to be close to regulators' definition of "proprietary trading" under the US Volcker rule will cease.

The bank is closing 340 branches on the Continent and pulling out of investment banking. It is also scaling back investment banking in Asia, although Barclays will maintain a presence in those regions to serve big international clients.

Mr Jenkins said the bank had to provide "a greater share" of the bank's earnings for investors. That included a pledge to work towards paying out 30 per cent of profits in dividends and to reduce the proportion of revenue paid out in salary and bonuses to investment bankers to a percentage in the "mid-30s". Last year the "compensation ratio" fell to 39 per cent from 47 per cent.

Mr Jenkins said he was firmly committed to the "universal" banking model: "The investment bank will remain a very large and important part of the group. We are well-positioned to become one of an increasingly small group of global investment banks."

Significantly, however, he said he supported the Government's plan to "electrify" the ring-fence it is setting up to protect retail depositers and small businesses. That puts it alongside Lloyds in taking a stance opposite to that of the British Bankers' Association, the main trade association, which was fiercely opposed to the plan when it was announced.

While the dividend was hiked to 6.5p from 6p last year, Barclays is still paying out substantially more to bankers than shareholders.

During 2012 the bank made adjusted pre-tax profits of £7bn, up 26 per cent, with the company's investment bank and wealth management division the top performers.

Statutory pre-tax profits slumped to £246m from £5.9bn, although that figure includes changes in the value of Barclays' own debt.

The shares closed the day up 25.85p at 327.35p as investors cheered.

Mr Jenkins said Barclays must change and would change: "Change is needed across industry, and Barclays is leading that change. I am totally committed to this. We have a clear goal to make Barclays the go-to bank and a clear plan to transform Barclays."

Ian Gordon, analyst at Investec, said: "The numbers are solid and the strategic outlook offers a beacon of light in the sector gloom."

The move to pull out of controversial business also received a cautious welcome from campaigners. Christine Haigh, from the World Development Movement, said: "As Barclays itself recognises, public opinion does not see food speculation as an acceptable activity."

However, she warned: "Without strong new regulation, Barclays is free to start speculating again at any time. Other banks, like world leader Goldman Sachs, are also free to carry on regardless."

David Hillman, from the Robin Hood Tax Campaign, said: "We're pleased Barclays is finally taking action to rebuild its tarnished reputation, but this will be an uphill struggle while big bonuses keep on coming."

News
A 1930 image of the Karl Albrecht Spiritousen and Lebensmittel shop, Essen. The shop was opened by Karl and Theo Albrecht’s mother; the brothers later founded Aldi
people
Arts and Entertainment
Standing the test of time: Michael J Fox and Christopher Lloyd in 'Back to the Future'
filmA cult movie event aims to immerse audiences of 80,000 in ‘Back to the Future’. But has it lost its magic?
Arts and Entertainment
Flora Spencer-Longhurst as Lavinia, William Houston as Titus Andronicus and Dyfan Dwyfor as Lucius
theatreThe Shakespeare play that proved too much for more than 100 people
News
exclusivePunk icon Viv Albertine on Sid Vicious, complacent white men, and why free love led to rape
PROMOTED VIDEO
Arts and Entertainment
Stir crazy: Noel Fielding in 'Luxury Comedy 2: Tales from Painted Hawaii'
comedyAs ‘Luxury Comedy’ returns, Noel Fielding on why mainstream success scares him and what the future holds for 'The Boosh'
Life and Style
Flow chart: Karl Landsteiner discovered blood types in 1900, yet scientists have still not come up with an explanation for their existence
lifeAll of us have one. Yet even now, it’s a matter of debate what they’re for
Arts and Entertainment
'Weird Al' Yankovic, or Alfred Matthew, at the 2014 Los Angeles Film Festival Screening of
musicHis latest video is an ode to good grammar. But what do our experts think he’s missed out?
Sport
New Real Madrid signing James Rodríguez with club president Florentino Perez
sportColombian World Cup star completes £63m move to Spain
Travel
Hotel Tour d’Auvergne in Paris launches pay-what-you-want
travelIt seems fraught with financial risk, but the policy has its benefits
Arts and Entertainment
booksThe best children's books for this summer
Life and Style
News to me: family events were recorded in the personal columns
techFamily events used to be marked in the personal columns. But now Facebook has usurped that
News
ebookA unique anthology of reporting and analysis of a crucial period of history
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

Programme Director - Conduct Risk - London

£850 - £950 per day: Orgtel: Programme Director - Conduct Risk - Banking - £85...

Business Analyst (Agile, SDLC, software)

£45000 - £50000 Per Annum + excellent benefits: Clearwater People Solutions Lt...

Finance Manager - Bank - Leeds - £300/day

£250 - £300 per day + competitive: Orgtel: Finance Manager - Accountant - Bank...

Compliance Officer - CF10, CF11, Compliance Oversight, AML, FX

£100000 - £120000 per annum + BONUS + BENEFITS: Harrington Starr: A leading fi...

Day In a Page

Noel Fielding's 'Luxury Comedy': A land of the outright bizarre

Noel Fielding's 'Luxury Comedy'

A land of the outright bizarre
What are the worst 'Word Crimes'?

What are the worst 'Word Crimes'?

‘Weird Al’ Yankovic's latest video is an ode to good grammar. But what do The Independent’s experts think he’s missed out?
Can Secret Cinema sell 80,000 'Back to the Future' tickets?

The worst kept secret in cinema

A cult movie event aims to immerse audiences of 80,000 in ‘Back to the Future’. But has it lost its magic?
Facebook: The new hatched, matched and dispatched

The new hatched, matched and dispatched

Family events used to be marked in the personal columns. But now Facebook has usurped the ‘Births, Deaths and Marriages’ announcements
Why do we have blood types?

Are you my type?

All of us have one but probably never wondered why. Yet even now, a century after blood types were discovered, it’s a matter of debate what they’re for
Honesty box hotels: You decide how much you pay

Honesty box hotels

Five hotels in Paris now allow guests to pay only what they think their stay was worth. It seems fraught with financial risk, but the honesty policy has its benefit
Commonwealth Games 2014: Why weight of pressure rests easy on Michael Jamieson’s shoulders

Michael Jamieson: Why weight of pressure rests easy on his shoulders

The Scottish swimmer is ready for ‘the biggest race of my life’ at the Commonwealth Games
Some are reformed drug addicts. Some are single mums. All are on benefits. But now these so-called 'scroungers’ are fighting back

The 'scroungers’ fight back

The welfare claimants battling to alter stereotypes
Amazing video shows Nasa 'flame extinguishment experiment' in action

Fireballs in space

Amazing video shows Nasa's 'flame extinguishment experiment' in action
A Bible for billionaires

A Bible for billionaires

Find out why America's richest men are reading John Brookes
Paranoid parenting is on the rise - and our children are suffering because of it

Paranoid parenting is on the rise

And our children are suffering because of it
For sale: Island where the Magna Carta was sealed

Magna Carta Island goes on sale

Yours for a cool £4m
Phone hacking scandal special report: The slide into crime at the 'News of the World'

The hacker's tale: the slide into crime at the 'News of the World'

Glenn Mulcaire was jailed for six months for intercepting phone messages. James Hanning tells his story in a new book. This is an extract
We flinch, but there are degrees of paedophilia

We flinch, but there are degrees of paedophilia

Child abusers are not all the same, yet the idea of treating them differently in relation to the severity of their crimes has somehow become controversial
The truth about conspiracy theories is that some require considering

The truth about conspiracy theories is that some require considering

For instance, did Isis kill the Israeli teenagers to trigger a war, asks Patrick Cockburn