Barclays PLC will cut about 3,000 jobs this year as the industry grapples with tougher regulation and the impact of a spreading sovereign debt crisis on investment banking operations.
First-half profits at the bank fell by a third after a drop in bond trading activity at its investment bank and a charge to compensate customers who were mis-sold insurance undermined a big improvement in bad-debt charges.
Weakness at Barclays Capital (BarCap) had continued into last month, the bank said yesterday.
Group pretax profit for the first six months of the year was ￡2.64 billion (US$4.3 billion), down 33 percent from a year ago, but above the average forecast of ￡2.4 billion by analysts polled by the company.
Barclays Capital’s first-half pretax profit fell 9 percent on the year and revenue at the investment banking arm was down 11 percent to ￡6.26 billion, led by a fall in fixed-income revenue.
However, that drop was less steep than at most rivals, after revenue across the industry slumped in the second quarter due to the eurozone debt crisis. BarCap’s income in the second quarter was down 14 percent from the previous quarter and first-half revenue from fixed income, currencies and commodities was down 20 percent from a year ago.
New Barclays CEO Bob Diamond, the American who built BarCap into a debt market powerhouse over the previous decade, told reporters the bank had already cut 1,400 jobs during the first half of the year and that the tally was likely to rise to about 3,000 by the end of the year.
“You should assume this trend to continue and increase somewhat,” Diamond said during a conference call.
Barclays joins a growing line of banks, including HSBC, Goldman Sachs, Credit Suisse and UBS to announce jobs cuts in recent weeks.
Diamond is aiming to cut ￡￡1 billion of annual costs and expects he could generate more than ￡6 billion per year of extra revenue by 2013 under a revamp plan.
“We have made good progress in the first half delivering against these in a difficult operating environment,” Diamond said in a statement accompanying the company’s first-half results.