Well, to anyone who has been following the story, there are not that many surprises. The biggest news is that a total of 3,700 jobs are to go – 1,800 in the investment bank, which we already knew about, and the other 1,900 rather more unexpectedly in the European retail and business division. Of the redundancies only 200 will be in the UK.
He also confirmed that the controversial structured capital markets tax planning division, which helps corporate clients avoid taxes, is to close. Although what that means exactly – will the staff simply be spread around other departments but continue to offer the same services? – remains to be seen.
Barclays is also to concentrate its efforts on those markets where it has ‘scale and competitive advantage’ – the UK, US and Africa. In Europe it will simply ‘maintain an appropriate presence’, whilst it will effectively leave the Asian emerging markets to rivals. Quite a high-risk strategy in the longer term.
The review was announced alongside Barclays results, which on an adjusted basis show profits up to £7.05bn from £5.59bn last year. But after exceptionals, that extremely healthy figure morphs into a barely-there £246m. A modest sum rather more in keeping with the sombre turnaround tone of the strategic review, we’re sure you’ll agree. The difference is accounted for by a huge charge against its own debt of £4.6bn, plus a £2.45bn provision against PPI and swaps mis-selling.
Jenkins (who started his career as an accountant) has also pledged an enthusiastic round of cost cutting to reduce overheads by £1.7bn to £16.8bn by 2015. The controversial bonus pool has shrunk 20% to £1.39bn, with total compensation (ie pay) accounting for £2.2bn, compared to £2.6bn last year. Jenkins, who has become well known for his love of management speak in the six months or so since he took over the helm at the battered Barclays, pledged to make the firm the ‘Go-to bank for all our stakeholders’, a more ‘values’ driven business and one which doesn’t ‘sell products to its customers which are not in their interests.’ That may not be expressed in the most beautiful language but it’s hard to argue that most of those stakeholders wouldn’t welcome such changes.
Jenkins also admits that it is likely to take ‘years’ to repair the damage done to Barclays reputation by the likes of Libor, PPI, swaps and the Qatari funding scandals. Not to mention any other whiffy doing which may not yet have come to light.
Despite the fact that his review was short on any details of where the new-look Barclays is going to find new revenues to improve its profitability, market reaction has been positive. Shares were up getting on for 5% on the news, suggesting that Jenkins has done a pretty good job of trailing his intentions and avoided giving investors any nasty surprises.
What is at least as important and much harder to judge, is how all his tough talk is going down with Barclays 140,000 or so staff. For it is on them that Jenkins depends to deliver his brave new bank. The hair shirt goes down well in public at the moment, but in private the clean-living majority of Barclays workers may be feeling a bit unloved just now.