Barclays on Queen Street, Morley, West Yorkshire
Image Source : Wkimedia. org
February 11, 2014 12:04 PM ET
LONDON (Reuters) – Barclays said it would axe up to 12,000 jobs this year even as it raised bonuses for investment bankers, prompting fury among politicians and unions who said it had not learned the lessons of the financial crisis.
Britain’s third-biggest bank said up to 9 percent of employees could go, including 7,000 in Britain, as it tries to lower costs. The cuts are not concentrated in any one business area.
It said it paid 2.4 billion pounds ($3.9 billion) in incentive awards last year, raising bonuses at the investment bank by 13 percent despite a slump in its profits. The average bonus for the investment bank’s 26,200 staff was 60,100 pounds.
Critics of the bonus hike said it showed Britain’s biggest banks were still failing to heed the lessons of a financial crisis caused by dangerous risk taking and excessive pay.
“Today Barclays has stuck two fingers up to hard-pressed families across Britain by announcing another multi-billion pound bonus pool,” said Frances O’Grady, General Secretary of the Trades Union Congress.
Barclays Chief Executive Antony Jenkins, who took the helm in 2012 after an interest rate rigging scandal, has vowed to improve culture and standards at the bank while also reducing risk and strengthening the balance sheet.
But its investment bank profits slumped 37 percent last year to 2.5 billion pounds and analysts voiced concern about whether Jenkins can reach his target of a return on equity above 11.5 percent by 2016.
Getting costs down looked more challenging than expected, they said, while increased regulatory pressure and a grim outlook for fixed-income revenue made the target on returns look difficult to achieve.
Barclays shares were down 5 percent at 261 pence by 7.55 a.m. ET, underperforming a 0.7 percent rise by an index of European banks.
“WE NEED THE BEST PEOPLE”
The higher bonuses lifted the compensation-to-income ratio in the investment bank to 43.2 percent last year from 40 percent in 2012. Jenkins, who gave up his own bonus for 2013, said he still aimed for a ratio in the “mid-30s” across the bank.
He defended the bigger bonus pot, saying the bank had to recruit the best staff to compete with global rivals and continued to have “constructive” talks with investors over pay.
“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,” Jenkins told reporters on a conference call.
“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.
But business leaders’ group the Institute of Directors said the bank’s bonus policy raised the question of whether it was being run for its shareholders, or its staff.
Barclays Fires 12,000; Reports Horrible Earnings, Awards Itself Bigger Bonuses
Submitted by Tyler Durden on 02/11/2014 07:58 -0500
It is not easy for one bank to anger more people with one announcement than what Barclays did in the past 24 hours. In one fell swoop, the British bank infuriated shareholders after announcing dismal earnings (an adjusted Q4 profit of about 200 million pounds and a statutory profit of less than 100 million as investment banking income slumped 37% as income fell 9% to 10.7 billion due to a fall in fixed income, and it took further charges related to a cleanup of the banking industry in the wake of the 2008 financial crisis) which sent the share price sliding, it then pissed off UK workers and taxpayers after it announced it would hike investment bank bonuses by 13% despite the abovementioned profit slump, and finally it crushed 9% of its workforce, or 12,000 workers, who are set to prepare pink slips as the bank “streamlines.”
Barclays said 820 senior roles would go, and half of those were cut at the investment bank in the last two weeks. It cut 7,650 jobs last year, including 1,400 in the investment bank, as part of a restructuring unveiled a year ago by Jenkins to cut 1.7 billion pounds of annual costs. There were 139,600 Barclays employees by the end of the year.
More from Reuters:
Stepping up efforts to cut costs, Barclays said up to 9 percent of employees could go, including 7,000 in Britain, where half of the affected staff had already been notified. The cuts are not concentrated in any single business area.
Britain’s third-biggest bank said it paid 2.4 billion pounds ($3.9 billion) in incentive awards last year after raising bonuses at the investment bank by 13 percent despite a slump in profits from the business. The average bonus across the investment bank’s 26,200 staff was 60,100 pounds.