As part of his long-awaited strategic overhaul of the bank, chief executive Antony Jenkins also announced plans to focus only on areas where the bank has strong returns and can make sustainable profits. A total of 19,000 staff will now be cut over the next three years in a drive to slash costs and boost returns.
“In the current environment the investment bank consumes too much capital and does not generate sufficient returns,” Jenkins said. “The resources behind it will enable us to compete and win in those areas where we have a competitive advantage.”
After the changes the investment bank will make up less than 30 per cent of Barclays’ risk weighted assets, from 51 per cent now.
Fixed income trading will bear much of the brunt of the cuts, while expensive, capital-intensive areas including long-dated derivatives will also be moved to a new bad bank – a non-core unit that will include all of Barclays’ western European retail banking, with plans to either wind down or sell each unit over the coming years. Asian units will also be cut back to a series of business hubs, focusing on international clients.
Analysts said the shake-up marks the death of Bob Diamond’s ambition to build a global giant.
“This is more like a death by a thousand cuts – Barclays no longer represents the establishment of a British version of Goldman Sachs,” said Robert Lyddon from banking network IBOS. “They are going to compete on a niche basis, not the broad based global offering in Bob Diamond’s vision.”
Barclays shares rose 7.78 per cent.