BARCLAYS announced thousands more job cuts this morning as it unveiled plans for a new "bad bank" to house much of its investment bank and continental European retail operations.
The bank announced in February that it would cut up to 12,000 jobs and is now looking to shed a further 7,000 investment banking jobs by the end of 2016. This includes nearly a third of the investment banking arm, which employs 24,000 people around the world, mainly in London and New York.
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The move comes after the investment bank was hit by a slowdown in the demand for government and company debt.
The new "bad bank" will sell or run down £115bn of “non-core operations”, which include £90bn of investment bank assets and all of its European retail banking operations, amounting to £16bn.
Chief executive Antony Jenkins described the changes as a "bold simplification" of Barclays. "We will be a focused international bank, operating only in areas where we have capability, scale and competitive advantage," he said.
Jenkins is determined to reduce the investment bank to no more than 30 per cent of Barclay’s business by 2016, compared to just over 50 per cent now. “The legacy of his predecessor Bob Diamond is being unpicked,” says The Guardian.
Fund manager Colin McLean of SVM Asset Management, told BBC Radio 4's Today programme that much depends on Barclays' ability to maintain profits and revenues while pulling away from “non-core operations, and shrinking its investment bank.
Losses from Barclays’ 572 branches in continental Europe widened from £277m to £964m last year. Its overall pre-tax profits were worse than many analysts had expected and its shares have been down about 14 per cent in the past year.
However, shares jumped 3.5 per cent at the start of trading today to 251.7p, a gain of 8.7p.