Barclays (NYSE: BCS) Cut 12,000 Jobs - Market News | Financial Buzz

Barclays (NYSE: BCS) to Cut 12,000 Jobs

Barclays, Investment, EmployeeBarclays Plc (NYSE: BCS), the second biggest bank in the United Kingdom by assets saw profits fall in the fourth quarter. They are set to cut up to 12,000 jobs, including 7,000 in Britain and more than 800 senior bankers this year. The cuts will reduce costs of 1.7 billion pounds (US$ 2.8 billion) by 2015. This round of job elimination came shortly after the bank terminated 7,650 positions in 2013. As of last year, there are a total of 139,600 employees at Barclays.     

Barclays fourth-quarter report indicated an adjusted pretax profit drop to 191 million pounds (US $314 million) from 1.4 billion pounds (US $2.31 billion) in the previous year’s period.  Fixed-income, currencies and commodities revenue, are usually a big source of income for Barclays’ investment bank. They fell by 16 percent in the fourth quarter from previous year. Investment banking services such as underwriting and mergers advisory also shrank 5 percent. 

According to Barclay’s full-year report, net profit for the year was £540 million (US $889.16 million), a decrease of £624 million (US $1.02 billion) for 2012. Ironically, to remain competitive, Barclays paid out £2.4 billion pounds ($3.96 billion) or a 13% bonus increases to investment bankers last year.

The investment banks compensation to income ratio—rose to 43.2 percent last year from 40 percent in 2012. Although, CEO Antony Jenkins forgo his own bonus for 2013, he aims to lower the ratio to “mid-30s” across the bank. Nevertheless, he received criticism from politicians and unions. Jenkins defended the decision on Tuesday saying, “We need to recruit people from Singapore to San Francisco. We need the best people in the bank to drive long-term sustainable returns for our shareholders.” 

The company did however pay £859 million pounds (US $1.4 billion) in dividends to investors, or 6.5 pence or (11 cents) a share. 

Roger Barker, director of corporate governance at the Institute of Directors voiced concerns over high bonuses in an e-mail statement, in which he raised the question, “for whom is this institution being run?” when executive bonus pool is nearly three times bigger than the total dividend pay out to the company’s owners.

Plagued by a Damaging Culture?

Rocked by fines for rigging Libor interest rates in 2012, Barclays’ culture changes might take 10 years, warned Jenkins.  At the helm, he vows to cut staff, improve efficiency, and set higher standards for staff conduct.  In the last two weeks, 400 jobs in its investment bank have been cut.  Similar numbers are projected in its corporate bank. Jenkins has the tough task to regain consumer confidence in Barclays and in the industry rifled by scandals.