BARCLAYS came through the 2007-08 global financial crisis in relatively good shape, tapping up investors across the world to stay afloat rather than sinking like RBS or Lloyds.
But there was no way it could keep on playing as it did in the boom years – weak markets hit profits and investors became more aware of what was going on under the hood of the firm instead of treating it as a cash machine that would keep on paying out no matter what.
Combine that with tight new regulations and the bank’s bosses had to make some serious changes.
All that was known for some years. The main reason the bank has made these decisions now is the regulations are at last starting to take solid form. Barclays has decided capital requirements on some derivatives make them too expensive to trade in, and margins in fixed income trading are too squeezed.
It sees this as a structural change, not simply one of the cycles banks go through every few years.
If it is right, this is the shape of the bank – and probably others to follow – for the foreseeable future.
The main risk is that Barclays will be tempted back into the market when the next upswing comes.
If Antony Jenkins resists that move, he could have created a tight, disciplined bank of the future.
But it is a brave move – if other banks make a killing on fixed income desks in the next upswing he may find it tough to keep his job.