Barclays Said to Plan Further 20% Investment Bank Job Cuts
Barclays Plc may cut an additional 20 percent of investment bank staff, with most of the losses in Asia and the global cash equities business, as Chief Executive Officer Jes Staley seeks to shore up profitability, according to people with knowledge of the decision.
The Asia securities division, with operations in markets including Japan, Hong Kong and Singapore, isn’t considered competitive and profitable enough, said the people, who asked not to be identified because the strategy is private. The cuts, which would come on top of an existing program to eliminate 7,000 jobs at the investment bank through 2016, could be announced early next year, they said.
A spokeswoman at Barclays said the bank is “constantly monitoring our opportunities in different geographies and businesses.” Barclays employed 20,500 people at the securities unit at the end of 2014.
Staley, who took over Dec. 1, has been tasked with improving profitability at the investment bank, which is lagging the lender’s other divisions and has been hurt by rising costs tied to past misconduct and tougher capital requirements. Since joining in April, Chairman John McFarlane, 68, has pledged to refocus the business on the U.K. and U.S. and has said the bank is reviewing the contributions of operations in Asia and the Middle East, because “we don’t like places that don’t make money.”
Barclays fell 0.3 percent to 229.6 pence in London on Friday, extending its loss to 5.7 percent this year.
Barclays doesn’t break out figures for the cash-equity business. The bank has been cutting costs at its Asia-Pacific operations, where it generated revenue of 776 million pounds ($1.2 billion) in 2014, about 3 percent of its total, compared with 12.4 billion pounds in the U.K. The bank employed 18,200 staff in the region at the end of last year, according to the bank’s annual report.
Other banks are also shutting businesses to focus on more profitable areas. Morgan Stanley is planning to cut as much as a quarter of its fixed-income staff after years of revenue declines and insufficient returns, people with knowledge of the plans said Dec. 1. Standard Chartered Plc, which makes almost all of its profit in Asia, said Nov. 3 it would eliminate 15,000 jobs to help save $2.9 billion by 2018.
When he was appointed in October, Staley told staff he would “complete the necessary transformation and repositioning of the investment bank to a less capital-intensive model” and restore a “collaborative” relationship with regulators. While the securities unit, headed by Tom King, contributes about a third of the bank’s revenue, it has the lowest profitability of four units with a 2.7 percent return on equity in 2014.
Staley, a former JPMorgan Chase & Co. investment banker, inherited a strategy from his predecessor Antony Jenkins that involved cutting a third of employees at the division while reducing its share of total total risk weighted assets to about a third from a half. Under existing plans, the bank was set to eliminate some 4,500 positions by the end of this year, with a further 2,500 cuts in 2016.
Mike Rake, who is stepping down as Barclays’s deputy chairman at the end of the year, has said Staley will prioritize the investment bank’s advisory and execution operations in London and New York, which includes mergers and acquisitions, debt capital markets and equity capital markets.