The bank will cut 1,800 jobs in the investment banking division, and 1,900 employees will be fired from its European retail and business banking unit
Barclays PLC (NYSE:BCS) (LON:BARC) announced a major restructuring plan to regain its reputation after a series of scandals at the bank. The British bank faced public criticism for its involvement in the Libor rate manipulation that forced the former chief executive, Robert E. Diamond Jr, to resign.
London-based Barclays Plc. (NYSE:BCS) announced that it incurred £835 million ($1.3 billion) losses in the fourth quarter of 2012, compared to a profit of £356 million in the same period of 2011. During the quarter, the bank had to put aside money to compensate small businesses that were inappropriately sold as interest-rate hedging products, and customers who were improperly sold loan insurance.
Without the adjustments, Barclays’ pretax profits would be £1.1 billion in the fourth quarter. The pretax profit at its corporate banking unit almost tripled to £107 million. The retail and business banking unit posted 17 percent rise in its pretax profit to £732 million. The investment banking division earned £858 million in pretax profits for the fourth quarter.
For the full year, losses stood at £1 billion, compared to £3 billion net profit in 2011. The annual loss was because of various costs related to the rate-rigging scandal, including a $450 million fine paid to the U.S. and UK authorities.
After reporting a big loss, the bank chief executive, Antony Jenkins, said ]Barclays will eliminate 3,700 jobs and shut down several business units. Barclays PLC (NYSE:BCS) (LON:BARC) will cut 8 percent of its total workforce in the investment banking division, or 1,800 jobs, to lower its exposure to risky trading activities. Another 1,900 employees will be fired from its European retail and business banking division. In total, the job cuts represent about 3 percent of the bank’s global employee strength.
Mr. Jenkins, who earlier headed consumer banking business of Barclays, said the bank has reviewed all the 75 business units on the basis of their profitability and impact on the bank’s reputation. Barclays PLC (NYSE:BCS) (LON:BARC) also announced plans to cut annual costs by £1.7 billion ($2.7 billion) to £16.8 billion by 2015.
Jenkins is expected to outline his restructuring plan to analysts today. He has to prove that he can change the company culture, and win the trust of customers after widespread public anger.
For 2012, the bank will pay 6.5 pence a share in dividends, up from 6 pence in 2011.