Barclays PLC will eliminate 3,700 jobs as part of a plan to reduce annual costs by ￡1.7 billion (US$2.6 billion) after swinging into a full-year loss.
The net loss was ￡1.04 billion, compared with a profit of ￡3 billion in the year-earlier period, the London-based bank said in a statement yesterday. Analysts had estimated a loss of ￡307 million, according to the median estimate of nine surveyed by Bloomberg. The figure includes the ￡290 million fine Barclays paid for rigging benchmark rates in June and ￡1.6 billion in provision for compensating clients wrongly sold insurance on loan repayments.
Antony Jenkins, who took over as chief executive officer in August, is seeking to revive profit at the lender and avoid repeating the regulatory missteps that led to the resignation of his predecessor, Robert Diamond. Jenkins yesterday stopped short of announcing a profitability target, saying only that he would target a return on equity that exceeds the lender’s 11.5 percent cost of equity.
“Our 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 Barclays reputation,” Jenkins, 51, said in the statement. “We expect to make good progress towards our financial commitments by 2014 and deliver them fully during 2015.”
The UK lender said it set aside ￡1.6 billion last year to compensate customers improperly sold payment protection insurance, compared with a ￡1 billion charge for the previous year. It also earmarked ￡850 million in redress for customers missold interest-rate swaps. Credit impairments and provisions fell to ￡3.6 billion from ￡3.8 billion a year earlier, missing the ￡3.49 billion estimate by Bernstein Research analyst Chirantan Barua. Operating expenses rose to ￡21 billion from ￡20.8 billion as the bank set aside more money for compensation.
“Impairment and expenses both came in worse than expected leading to a miss,” Barua said. “All eyes are on the strategy presentation.”
Adjusted pretax profit, which excludes gains on the value of the bank’s own debt, provisions and impairments, climbed 26 percent to ￡7.05 billion, from ￡5.59 billion for 2011. That missed the ￡7.14 median estimate of 18 analysts surveyed by Bloomberg.
The lender plans to cut 3,700 jobs this year, with 1,800 coming from its investment bank and 1,900 in European consumer and business banking. Barclays employs about 24,000 people at its investment-banking unit globally, and about 140,000 worldwide.
Barclays will shut its structured capital markets unit at its investment bank. The firm will take a ￡500 million restructuring charge in the first quarter.
The investment bank posted full-year revenue of ￡11.7 billion, compared with ￡10.3 billion in the year-earlier period, beating Napier’s ￡11.34 billion estimate.
Barclays’ fixed-income, commodities and currencies business, its largest by sales, posted fourth-quarter revenue of ￡1.46 billion, up 50 percent from ￡971 million a year earlier.