Barclays to axe 3,000 jobs as profit falls

Barclays will cut about 3,000 jobs this year as the industry grapples with tougher regulation and the impact of a spreading sovereign debt crisis on investment banking operations.

First half profits at the bank fell by a third after a drop in bond trading activity at its investment bank and a charge to compensate customers who were mis-sold insurance undermined a big improvement in bad debt charges.

Weakness at Barclays Capital had continued into July, the bank said on Tuesday.

Group pre-tax profit for the six months to the end of June was £2.64bn, down 33 per cent from a year ago but above the average forecast of £2.4bn among analysts polled by the company.

Barclays Capital's half-year profit fell 9 percent on the year and revenue at the investment banking arm was down 11 per cent to £6.26bn, led by a fall in fixed income revenue.

That drop was less steep than at most rivals, however, after revenue across the industry slumped in the second quarter due to the euro zone debt crisis. BarCap's income in the second quarter was down 14 percent from the previous quarter and first-half revenue from fixed income, currencies and commodities was down 20 per cent from a year ago.

New chief executive Bob Diamond, the American who built BarCap into a debt market powerhouse over the previous decade, told reporters the bank had already cut 1,400 jobs during the first half and that the tally was likely to rise to about 3,000 by the end of the year.

"You should assume this trend to continue and increase somewhat," Diamond said during a conference call. Barclays joins a growing line of banks, including HSBC (HSBA.L), Goldman Sachs (GS.N), Credit Suisse (CSGN.VX) and UBS (UBSN.VX) to announce jobs cuts in recent weeks.

Diamond is aiming to cut 1 billion pounds of annual costs and reckons he can generate more than 6 billion pounds per year of extra revenue by 2013 under a revamp plan.

"We have made good progress in the first half delivering against these in a difficult operating environment," Diamond said in a statement accompanying the company's first-half results.

Earnings were helped by a 41 per cent tumble in bad debt charges during the first-half to £1.8bn.

But Barclays took a 1 billion pound charge to cover compensation for the mis-selling of insurance policies in Britain, which had been signalled previously.

Its underlying profit was £3.7bn, up 24 per cent on a year ago.