Barclays begins cutting jobs at investment unit

British lender will partly reverse its expansion into equities and mergers in strategic changes

PUBLISHED : Wednesday, 23 January, 2013, 12:55pm
UPDATED : Thursday, 24 January, 2013, 5:01am

Barclays, Britain's second-largest bank, is preparing to cut jobs at its investment bank and has begun consulting with employees.

This "exercise is being carried out so that we can start to effect some of the strategic changes" to be announced on February 12, the bank said in a statement yesterday.

Chief executive Antony Jenkins, who took charge in August last year after the bank was fined a record £290 million (HK$3.56 billion) for manipulating the London interbank offered rate, is preparing to announce how he will revamp the bank.

Shrinking the investment bank would partly reverse his predecessor Robert Diamond's expansion into equities and mergers advisory in Asia and Europe following its acquisition of the North American operations of Lehman Brothers in 2008.

Barclays started eliminating some European investment banking jobs last month and may make cuts in Asia in coming weeks, according to people with knowledge of the matter.

The reductions might be equivalent to 5 to 10 per cent of the investment bank, or about 2,000 employees, said the people, who asked not to be identified because they were not authorised to speak publicly.

The securities unit employs about 9,000 people in Britain and about 24,000 globally.

The firm has said it will eliminate businesses that are a risk to its reputation and are not profitable enough as regulators toughen capital requirements.

Barclays' investment banking head, Rich Ricci, said in September last year the bank would review products and services that could harm its reputation, citing parts of the bank's tax advisory business and the sale of structured products to small and medium-sized businesses.

Investment banks are shrinking as revenue struggles to rebound amid Europe's sovereign debt crisis.

UBS, Switzerland's largest lender, said in October it would cut about 10,000 jobs and retreat from some trading businesses.

Morgan Stanley, with securities operations in London, plans to cut about 1,600 jobs from its investment bank and support employees, a person with knowledge of the matter said earlier this month.

Financial firms have cut more than 115,000 jobs globally since the start of last year as banks seek to curb compensation costs and turn back from capital-intensive businesses.

"While the restructuring of investment banking at UBS is very much driven by the Swiss regulator, the changes that are to come at Barclays reflect more the structural change that we observe in banking," said Tom Kirchmaier, a fellow in the financial markets group at the London School of Economics.

Employers cutting 20 or more jobs in Britain must hold a period of consultation where workers are told why their roles will be eliminated and what options are available, according to the government's information website.