Barclays Bank is to cut 19,000 jobs by 2016, greatly simplifying its operations by pulling back on investment banking and returning to its roots in retail banking.
The 325-year-old British bank has suffered through a string of scandals, including its involvement in the rigging of the Libor interbank lending rate which resulted in the resignation of CEO Bob Diamond.
But new CEO Anthony Jenkins has promised a “culture change” at the institution and will start with abandoning ambitions to move onto Wall Street with an enhanced trading unit. Instead he will cut 7,000 jobs from the investment banking unit.
"Barclays will be much less exposed to volatility in our investment bank; we will have a structurally lower cost base; and we will continue to invest for growth," he said in a statement. "We will be leaner, simpler and stronger."
Moving on from investment banking
Like RBS and UBS, it will cut back in that area and focusing on customer accounts, wealth management, the Barclaycard and business lending.
As it winds down its investment banking operations, it will spin most of them into a separate “bad bank” or non-core unit.
In addition to fines resulting from the Libor scandal, Barclays is facing lower profits from fixed income products and commodities trading and stricter rules from regulators over capital holdings and trading on its own account.
Instead, the remaining investment banking unit will focus on equities and mergers, an area that seems to be growing.
14,000 jobs gone this year
About 14,000 jobs are to disappear from Barclays this year, but it avoided saying whether there would be branch closings in Britain.
Dominic Hook of the Unite trade union, said that times had been turbulent for the bank's workers, "who have worked hard to keep the bank on track against a backdrop of continued uncertainty and redundancies."
The bank is streamlining geographically, closing customer branches in Portugal, Spain, Italy and France, but keeping its operations in Africa, described as "an exciting, growing part of the world."
It faces backlash from political circles where massive layoffs are unpopular amid the U.K.’s trying labour market, especially since the bank went ahead with bonuses for its executives.
But investors liked the news and Barclay’s shares jumped five per cent in trading today in London.