Investment bankers at Barclays brace for cull
Jim Armitage is the City editor of The Independent and London Evening Standard group of newspapers. He has been a reporter and editor for more than 20 years and was recently shortlisted for the Press Gazette financial journalist of the year and The Society of Editors financial journalist of the year awards. He contributes news, investigative reports and comment to the Independent titles plus a daily column in the Evening Standard.
Friday 14 March 2014
Barclays is planning to axe thousands of investment bankers' jobs in a radical overhaul of the controversial division.
News of the restructuring comes soon after the bank provoked outrage by declaring it was upping bonuses in its investment arm by 13 per cent despite a steep fall in profits.
The chief executive Antony Jenkins is under huge pressure from investors to cut costs in the division and is expected to announce the details of his review by the summer.
Reports last night suggested that the bank may even be looking to replace Tom King in Wall Street and Eric Bommensath in Europe, the investment bank's chiefs. Barclays denied there was any hunt for replacements of the two respected bankers.
The pair were only promoted to the co-chief executive positions to replace Rich Ricci, who quit amid the Libor-rigging scandal.
Mr Jenkins is looking to move Barclays' capital to other, more profitable areas of the bank than investment banking, such as Barclaycard and mortgage lending in the UK, the Financial Times reported.
The investment banking unit had a return on equity last year of 8.2 per cent – below its cost of capital – while its ratio of costs to income increased from 39.6 to 43.2 per cent.
It said in February that it would reduce its workforce by up to 12,000 jobs this year even while it raised bonuses for its investment bankers.
The cuts announced last month will hit 820 senior managers, of which 220 will be at managing director level and 600 will be in the grade of "director". About 400 of the senior job cuts were said then to be investment bankers, which suggests the new round of cuts that emerged last night could come on top of that.
The bank's total bonus pool for 2013 rose by 10 per cent to £2.38bn, with the investment bank's bonus pool increasing by 13 per cent. That provoked outrage from many shareholders who pointed out that the amount being doled out to staff was out of kilter with the amount going to the investors in the form of dividends. Barclays only paid a dividend totalling £859m.
The bank already cut 7,650 roles last year.
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