The restructure will slash costs by £1.7bn to £16.8bn, with 1,800 jobs being axed in the corporate and investment bank, and a further 1,900 in its Europe retail and business banking division.
The reductions are expected to result in a restructuring cost of around £500m. Barclays made the announcement in a review statement, which was issued this morning alongside its results.
The bank says its plan is built on a rigorous review of 75 distinct business units to determine not only their ability to generate an appropriate and sustainable return on equity, but also their strategic attractiveness, including their impact on the bank’s reputation.
Justin Urquhart Stewart, marketing director at 7IM commented: “Anthony Jenkins has made some intelligent and brave decisions at a time when investment banking has been throwing out some really good figures. It signals a return to ‘dull banking’ but there is nothing wrong with that, and it is coming at the right time.”
"He’s not going to get plaudits for generating huge profits, but they will be more sustainable.”
Despite the difficulties faced in 2012, including a probe by the FSA into its 2008 fund raising and loans to Qatar, the Libor scandal and criticism over its corporate and bonus culture, Barclays’ adjusted pre-tax profits for 2012 were up 26% on 2011 to £7.1bn. Corporate and investment banking profits rose 46% and wealth management profits increased by 52%.
Keith Bowman, equity analyst at Hargreaves Lansdown said: “In all, the strategy update and results are largely in line with expectations.
“Significant management changes have been implemented, a universal banking business model offers its own diversification attractions, while cyclical economic exposure and the lack of government ownership also appeal. For now, despite a 60% plus gain in the share price over the last six months alone, the new chief executive looks to have done enough, with analyst opinion remaining positive in tone.”
