On yer bike: Barclays to cut up to 12,000 jobs

Bonuses are up 10% despite pre-tax profit falling by a third.

by Rachel Savage
Last Updated: 11 Feb 2014

Barclays is planning to cut between 10,000 and 12,000 jobs this year, a day after rushing out news that its adjusted pre-tax profit had fallen by a third.

Around 7,000 of the redundancies will be in the UK, and 820 senior managers are due for the chop, half of which will be from investment banking. The latest axe wielding comes after Barclays ditched 7,560 of its 140,000 or so staff last year.

Meanwhile, bank bashers will be able to get their gnashers into the news that Barclays upped its bonus pool by 10% in 2013 to £2.38bn. Performance payouts in the investment bank were up 13% to £1.6bn, despite profits in the division falling 37% to £2.52bn.

Barclays 24,000 investment bankers now get an average bonus of £60,100, up from £54,500 in 2013. Many of them are in shares that can’t be cashed in right away, so their value could rise.

‘At Barclays we believe in paying for performance and paying competitively,’ chief exec Antony Jenkins said in a statement. ‘Ensuring that we have the right people in the right roles serving our customers and clients effectively in a highly competitive global environment is vital to our ability to generate sustainable shareholder returns.’

Jenkins, who turned down a bonus of up to £2.75m, has a point. Wall Street and Asian are paying far heftier bonuses, less encumbered by political sparring and the EU mulling further limits on how much can be paid for performance. If Barclays et al can’t hang onto their best bankers then they’re a lot less likely to turn a profit.

On the other hand, it seems pretty counterintuitive for Barclays to pay staff more when it’s doing worse, especially as Jenkins is in the middle of a five-year plan to salvage the bank’s reputation in the eyes of the finance-bashing public.

Barclays reported yesterday that its adjusted pre-tax profit had fallen 32% to £5.2bn in 2013, although statutory pre-tax profits jumped to £2.9bn from £800m. Caught between a rock and a hard place, Jenkins has opted to pay his staff more in the hope that they’ll stay put and bring in business, although his instinct as a retail banker may be to keep cutting the investment bankers down to size.

Investors don’t seem best pleased though – shares were down more than 3% in mid-morning trading.

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