UK to Be Hit Hard as Barclays Makes More Job Cuts
Barclays said last week that it plans to reduces its work force by up to 7,000 more jobs, bringing the total number of cuts over three years to 19,000. More than half of these new layoffs are expected to occur in the UK.
The bank is scaling back its investment banking arm substantially. Currently 50% of Barclays’ assets, investment banking will account for only 30% by 2016. The bulk of Barclays’ focus will now be centered on other areas: retail and corporate banking, credit cards and banking in Africa.
About 2,000 cuts are expected by the end of this year. Barclays had previously estimated that it would lose about 12,000 jobs this year.
CEO Antony P. Jenkins said that Barclays would be “a focused international bank, operating only in areas where we have capability, scale and competitive advantage.” He added that, in the future, the bank would be “leaner, stronger, much better balanced and well-positioned to deliver lower volatility, higher returns and growth.”
Jenkins, who took over as CEO after Bob Diamond left due to the infamous Libor scandal, has been working to repair Barclays’ reputation. He didn’t exactly help his cause by paying executives larger bonuses last year in the face of falling profits. However, he said last week that there would be no repeat of such actions.
Mark Littlewood, director general at the Institute of Economic Affairs, called the loss of many thousands of jobs at Barclays “sad and depressing.” Instead of trying to ensure that all banks are safe, Littlewood said that regulators should be trying to “ensure that banks can fail safely and that collapsed banks can be wound up without requiring any support from the taxpayer.”
Littlewood commented that, contrary to popular belief, the financial services industry is one of the most highly regulated sectors of the economy. “This continual trend towards high regulation and high compliance will simply push the investment industry to less heavily regulated countries,” he warned. “If we continue to regulate away professional discretion from those working in the city of London, we risk undermining the city and seeing our investment banking sector shrink.”