Barclays is planning to cut 820 managing director and director-level staff, of which about half are expected to come from its investment banking arm, as part of an effort to reduce costs
Hundreds of senior Barclays investment bankers and managers face being made redundant this year, along with thousands of ordinary staff, as the lender looks to cut as many as 12,000 jobs.
Barclays is planning to cut 820 managing director and director-level staff, of which about half are expected to come from its investment banking arm, as part of an effort to reduce costs across the bank.
UK-based staff will bear more than half of the overall job cuts, with Barclays set to make about 7,000 British staff redundant as it increasingly uses IT to replace jobs and accelerates the closure of branches.
At present, Barclays employs almost 140,000 staff in offices and branches across the world.
Officials from the Unite union yesterday held talks with the bank at its London headquarters to discuss the cuts, which come as the country’s other major high street banks all continue to look for further cost savings
The job losses came as Barclays said it would increase the size of the average bonus paid to its investment bankers by 10pc to £60,100, despite a 37pc fall in the division’s profits last year.
The fall was largely caused by a slowdown in trading activity in the final three months of last year, which led the investment bank to record a loss for the period of £329m.
The Institute of Directors said: “[It] cannot be right in any business for the executive bonus pool to be nearly three times bigger than the total dividend payout to the company’s owners.”
It added: “We would like to see shareholders take a more aggressive role in the governance of the bank.”
Shareholder dividends for 2013 will total £859m, compared to a total staff bonus pool for last year of £2.38bn. This equates to a dividend-to-compensation ratio of 2.77, a slight improvement on last year’s figure of 2.98, when the bank paid out £733m to its investors, but £2.17bn in bonuses.
Andrew Tyrie MP, chairman of the Treasury select committee, questioned Barclays’ decision to defer bonuses by just three years amid a push to extend deferral periods out to at least five years.
“Barclays’ bonus deferral, at three years, looks too short. Shareholders also need to make up their minds whether aggregate remuneration is justified by the return on equity,” said Mr Tyrie.
Fears over the bank’s performance led its shares to trade down more than 7pc at points during yesterday’s session, but the stock rallied to close down 2.17pc at 269.03p, valuing the lender at £43.4bn.
Among the disappointments in Barclays’ results was its continuing inability to generate a return on shareholder equity which, measured on a statutory basis, is just 1pc – while the bank’s cost of equity is put at 11.5pc.
Antony Jenkins, chief executive of Barclays, said he hoped to improve returns so that by 2016 the business would be making a return greater than its cost of equity and defended the bank’s bonuses.
“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,” said Mr Jenkins.
“I understand that there will be some (people) who feel that this decision is the wrong one for Barclays. But it is the decision of the board and myself that this entirely is the right decision for the group and in the long-term interests of shareholders,” he said.
“At Barclays we believe in paying for performance and paying competitively. Ensuring that we have the right people in the right roles serving our customers and clients effectively in a highly competitive global environment is vital to our ability to generate sustainable shareholder returns.”
The release of the results followed two unscheduled announcements in the past two weeks of various financial figures by Barclays. Last month, the bank published a surprise update pointing to its progress on hitting its cost targets and the size of fourth-quarter charges for litigation and financial penalties.
This was followed on Monday by a second announcement following the apparent leak of sensitive financial data that forced Barclays to publish its pre-tax profit figures one day ahead of schedule, which showed it had made a statutory pre-tax profit of £2.9bn and £5.2bn after adjusting for one-off items.
Barclays is the first major British lender to report its full-year results and will be followed tomorrow by Lloyds Banking Group.
In the case of Lloyds, the bank has already published its pre-tax profits after its own unscheduled update this month where it said it had made an underlying profit for last year of £6.2bn.
Concerns were also raised over the fall in the bank’s Tier 1 core capital ratio, which fell from 9.6pc at the end of the third quarter to 9.3pc by the end of last year.
The fall was driven by larger-than-expected regulatory capital requirements and highlighted the increased capital costs the bank will face as it attempts to improve returns.
Filippo Alloatti, a senior analyst at fund manager Hermes, warned that Barclays executives faced a “conundrum”. He said:
“The much-maligned investment bank is still generating more than 60pc of group profits, helping to slowly expand its capital base and pay a dividend. However, the very same investment bank is, considering Basel [III capital] requirements and the Financial Stability Board’s mandate, limiting the strategic options for Barclays.”
Mr Jenkins said banking was going through a “100-year transformation” as technology and cost pressures reshape the industry, and he was optimistic that Barclays was well set for a “pivotal” 2014.
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