Barclays to axe 3,700 jobs and cut costs after Libor losses
Barclays will cut at least 3,700 jobs this year and slash costs, the bank announced yesterday, as it also revealed that it had plunged into an annual net loss amid the Libor rate-rigging crisis.
The British bank said it would "reduce headcount by at least 3,700 across the group, including 1,800 in the Corporate & Investment Bank and 1,900 in Europe Retail and Business Banking". Barclays employs 140,000 staff.
The bank reported a loss after tax of £1.04 billion (HK$10.8 billion), compared with a net profit of £3 billion in 2011 - news brushed aside by the market as its share price soared yesterday.
"There is no doubt that 2012 was a difficult year for Barclays and the entire banking sector," said CEO Antony Jenkins, brought in to shake up the bank in the wake of the Libor scandal that has rocked other lenders.
"The behaviours which made headlines during the year stemmed from a period of 20 years in banking in which the sector became too aggressive, too focused on the short-term and too disconnected from the needs of customers and clients, and wider society," he said. "Barclays was not immune … and we suffered reputational damage in 2012."
Jenkins ordered a strategic review after replacing Bob Diamond as chief executive five months ago and after the bank was fined US$450 million by British and US regulators for attempted manipulation of Libor and Euribor interbank rates.
As well as deciding to scrap thousands of jobs, Jenkins said he would slash the bank's costs by £1.7 billion in 2015.
Barclays said the job cuts would incur a restructuring charge of close to £500 million in the first quarter of next year. It would focus its investment projects in Britain, the United States and Africa, "whilst maintaining an appropriate presence across Europe and Asia".
Barclays would set out also to "provide greater disclosure and transparency" around its financial performance.
This month, Jenkins announced that he would give up his bonus, reported to have been at least £1 million, because of the bank's problems.
Barclays last week said it had set aside another £1 billion to cover compensation for mis-selling credit insurance and interest rate hedging products, which comes on top of the Libor fallout.
In another blow, Barclays recently revealed that Britain's Serious Fraud Office was investigating payments made to Qatar Holding, which the bank tapped for funds at the height of the 2008 financial crisis to avoid part-nationalisation.
Despite its problems, Barclays' shares were showing a gain of 4.38 per cent at 314.6 pence in trading yesterday on London's benchmark FTSE 100 index.
Libor, or London Interbank Offered Rate, affects what banks, businesses and individuals pay to borrow money. Euribor is the euro-zone equivalent.