LONDON May 7 Barclays Plc is set to
announce plans to cut thousands of jobs and shrink its
investment bank as Chief Executive Antony Jenkins tries to get
his turnaround plan for the British bank back on track after a
bad 10 months.
Jenkins, who took the CEO hot seat in August 2012 after
investment banker Bob Diamond was ousted following a scandal
over the rigging of benchmark interest rates, will lay out a
revised strategy for Barclays on Thursday.
His original plan to cut jobs and improve profitability, set
out to much fanfare less than 15 months ago, needs some
UK rules forcing the bank to hold more capital than
expected, a slump in trading revenues, an exodus of U.S.
investment bankers and another row about their bonuses has left
Jenkins needing to revise his strategy and make deeper cuts.
"They've got to bring one very big hare out of a very small
hat," one shareholder in the bank said on Wednesday.
The shareholder added he was looking for concrete evidence
on how the bank's return on equity will move back above cost of
equity, which is estimated at 10.5 percent. Barclays' group RoE
was just 4.5 percent for the whole of last year and 6.4 pct in
the first quarter, including 4.7 percent in the investment bank.
Analysts said Jenkins could cut several thousand jobs from
the investment bank's 26,000 workforce, while some estimated up
to 7,500 needed to go to save over 1 billion pounds a year.
Barclays will also set up a "bad bank" portfolio of assets
it deems non-core, to be sold or run down as part of the
strategic review, a person familiar with the matter said.
That process will be run by Eric Bommensath, co-head of
Barclays' investment bank, and is likely to include 56 billion
pounds of assets already marked as non-core and could include
some retail banking businesses in France, Italy, Spain and
Jenkins is expected to release more aggressive cost-cutting
targets, but may have to delay his targets on profitability and
cost-efficiency ratios by a year, analysts said.
In the first quarter, only UK retail banking and the bank's
star business, its Barclaycard credit card arm, achieved returns
on equity above Jenkins' target.
The investment bank is under most scrutiny as tougher rules
requiring banks to hold more capital to cover risky assets mean
it consumes half of the bank's capital, hurting the returns it
A grim first quarter, when investment bank income slumped 28
percent due to a drop in fixed income, currencies and
commodities revenues, has added to the pressure for radical
"Barclays management have been given all the reasons
required to embark on fundamental restructuring of the
investment bank in particular," said Jason Napier, analyst at
(Additional reporting by Chris Vellacott; Editing by David
Holmes and Keiron Henderson)