Barclays is shaking up its investment bank next month, and analysts at Bernstein expect around 7,400 staff to lose their jobs.
It might sound like a stark turnaround for the bank – earlier this year chief exec Antony Jenkins increased bonuses for investment bankers because staff were jumping ship to higher-paying banks, particularly in the US.
But if Barclays is going to keep paying those high wages, which it has to to keep the best staff, then it cannot afford so many of them.
This chart shows Barclays pays more than 40p out to investment bank staff for every £1 they bring in – way higher than the 30p or so Citi and JP Morgan pay out.
As a result it is going to have to cut headcount, and Bernstein reckons fixed income, commodities and currencies (FICC) staff in the UK and Europe will face the axe.
Other parts of the bank may have held out for a cyclical upswing as the economy recovers, with equitues prices and deal volumes soaring, for instance.
But FICC is not going to bounce back. Bernstein estimates regulation and falling prices have permanently destroyed 20 to 30 per cent of the unit’s income.
That will not just affect Barclays – JP Morgan and Citi both saw FICC incomes fall by around 20 per cent in the first quarter of this year.
Expect a fresh squeeze on fixed income traders across the world this year.