CEO Jes Staley said to mull deeper cuts at Barclays Investment Bank

Newly installed Barclays CEO Jes Staley said he is mulling deeper cuts at the bank's securities unit.
Newly installed Barclays CEO Jes Staley said he is mulling deeper cuts at the bank's securities unit.PHOTO: AFP

LONDON (BLOOMBERG) - Less than a week into his new job, Barclays Plc Chief Executive Officer Jes Staley is mulling deeper cuts at the securities unit that could see an additional 20 percent of bankers lose their jobs, according to people with knowledge of the matter.

Under the plan, the bank is looking to eliminate jobs in Asia and the global cash equities business, the people, who asked not to be identified because the strategy is private, said late Friday. The cuts, which would come on top of an existing program to reduce 7,000 jobs at the investment bank through 2016, could be announced early next year, with the Asia securities division not considered competitive and profitable enough, they said.

"The focus of Barclays's 'new' investment bank is the U.S. and the U.K. and everything else is peripheral, so no surprise Asia is taking the biggest hit," said Christopher Wheeler, an analyst in London with Atlantic Equities LLP. "The problem is that the investment bank has been subject to 'death by a thousand cuts' and morale has been hard hit. It must be hoped this is the last big culling, if the franchise is to survive."

Mr Staley, who took over Dec. 1, has been tasked with improving profitability at the investment bank, which is lagging the lender's other divisions and has been hurt by rising costs tied to past misconduct and tougher capital requirements. Since joining in April, Chairman John McFarlane, 68, has pledged to refocus the business on the U.K. and U.S. and has said the bank is reviewing the contributions of operations in Asia and the Middle East, because "we don't like places that don't make money."

A spokesman at Barclays said in a statement on Friday that the bank is "constantly monitoring our opportunities in different geographies and businesses." Barclays employed 20,500 people at the securities unit at the end of 2014.

"The investment bank is the place where we think the returns can be boosted most," Sandy Chen, an analyst at Cenkos Securities Plc in London with a hold recommendation on Barclays shares, told Bloomberg Television's Jonathan Ferro on Monday. Staley "is getting his feet on the ground. He knows investment banking, he knows how to handle all the weaponry on various desks." Barclays rose 1.1 per cent to 232.10 pence at 8:55 a.m. in London, paring losses this year to about 4.6 per cent.

Barclays doesn't break out figures for the cash-equity business. The bank has been cutting costs at its Asia-Pacific operations, where it generated revenue of 776 million pounds (S$1.67 billion) in 2014, about 3 per cent of its total, compared with 12.4 billion pounds in the U.K. The bank employed 18,200 staff in the region at the end of last year, according to its annual report.

Other banks are also shutting businesses to focus on more profitable areas. Morgan Stanley is planning to cut as much as a quarter of its fixed-income staff after years of revenue declines and insufficient returns, people with knowledge of the plans said Dec. 1. Standard Chartered Plc, which makes almost all of its profit in Asia, said Nov. 3 it would eliminate 15,000 jobs to help save US$2.9 billion (S$4.05 billion) by 2018.