Sunday, February 17, 2013

Barclays to cut 3,700 jobs as profits plunge

Anthony Jenkins, Group Chief Executive of Barclays bank, poses for photographers during an interval in a media conference in central London on February 12, 2013.|AFP PHOTO/CARL COURT

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Scandal-hit banking giant Barclays has said it was axing at least 3,700 jobs under a strategic overhaul, but revealed it was paying ? 1.85 billion sterling in bonuses to staff, RTE Ireland reported on 12 February. ?Chief executive Antony Jenkins is shutting the bank's controversial Structured Capital Markets tax advisory division. He said 1,800 jobs would go in corporate and investment banking and another 1,900 across its European retail and business arm as part of a plan to slash costs by ? 1.7 billion.

Nearly ? 2.5 billion of cash set aside to cover mis-selling compensation claims contributed to a plunge in pre-tax profits to ? 246 million in 2012 from ? 5.9 billion the previous year.

The bank's bonus pot will mean each employee gets ? 13,300 on average, with an average of ? 54,100 for investment banking staff.

The pool is lower than the ? 2.2 billion paid out last year, the bank noted.

Barclays said 1,600 jobs have already been cut in the investment banking business since the start of the year.

Jenkins announced he was waiving his bonus for 2012 earlier this month, but the overall staff bonus pot for 2012 is likely to stoke further controversy given the recent series of scandals to rock the group.

Barclays said profits rose 26% to ? 7.05 billion on an underlying basis, with mis-selling provisions stripped out and not including movements in the value of its own debt.

The bank's bottom line profits were heavily impacted by mis-selling provisions, with ? 1.6 billion put by to cover claims relating to payment protection insurance (PPI) and ? 850 million for interest rate swaps sold to small businesses.

Barclays said its investment banking business delivered a 37% rise in pre-tax profits to ? 4.1 billion in 2012. Its UK retail and business banking division saw profits tumble 71% to ? 292 million after PPI provisions, although it said profits rose 4% to ? 1.5 billion on an underlying basis. ?All of the 1,900 retail job cuts announced today involve the bank's European arm, with redundancies across Spain, Italy, Portugal and France.

"There is no doubt that 2012 was a difficult year for Barclays and the entire banking sector,'' the bank's chief executive said.

He is leading a campaign to fix the bank's reputation following the Libor and mis-selling scandals. But Barclays is facing yet more investigations over its fundraising in the Middle East at the height of the financial crisis, which helped it avoid a government bail out.


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