Bloodbath at Barclays as it axes 7,000 investment bankers in massive cull of 19,000 jobs

• Radical shake-up at Barclays comes after bank's profits fell earlier this year
• Investment division to lose 7,000 jobs while a total of 19,000 will go by 2016
• At least 7,000 bankers in the City of London will be given the chop
• Marks the end of an era for bank which came to define 'casino' culture
• Barclays says business will be 'repositioned, simplified and rebalanced'

By Matt Chorley and James Rush

Barclays today took the axe to its controversial investment banking division, saying it would sack thousands of highly-paid bankers.

A total of 7,000 jobs will go in its investment division, including more than 2,000 in the UK, marking the end of an era for the high-stakes casino banking which defined the financial crisis.

The 'bold simplification' plan will cut a total of 19,000 staff around the world by 2016, including ditching its European chain of high street banks in Portugal, Spain, Italy and France.

The dramatic shake-up from the great survivor of the banking crash comes after its profits fell earlier this year - but at the same time it came under fire for raising bonuses by 10 per cent.

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Barclays has announced it is to axe 7,000 jobs from its investment banking division by 2016

In a statement to the stock market, Barclays said its business ‘will be repositioned, simplified and rebalanced’.

Shares rose by 3.5 per cent in early trading this morning.

The bloodletting at the investment arm is likely to see dozens of millionaire bankers shown the door.

The smaller bank will focus on its high street operation and underwriting bonds and shares.

Chief executive Antony Jenkins made clear he hopes the changes will draw a line under a turbulent period for the bank.

He said: ‘We will be a focused international bank, operating only in areas where we have capability, scale and competitive advantage.

‘In the future, Barclays will be leaner, stronger, much better balanced and well positioned to deliver lower volatility, higher returns, and growth.

‘My goal is unchanged: to create a Barclays that does business in the right way, with the right values, and delivers the returns that our shareholders deserve.’

The move is a major change for the company which became notorious for its so-called ‘casino banking’ under its former chief executive Bob Diamond.

While Barclays survived the financial crisis without a taxpayer-funded bailout - unlike RBS and Lloyds - it did not escape the wrath of politicians.

David Cameron led a furious attack on the culture of the bank after it admitted traders had manipulated key interest rates.

At height of the libor rate-fixing scandal, the Prime Minister blasted: 'People have to take responsibility for the actions and show how they're going to be accountable for these actions.

'It's very important that goes all the way to the top of the organisation.'

Mr Diamond resigned days later, to be replaced by Mr Jenkins who has spent two years overhauling the firm.

Chief executive Antony Jenkins said the bank will axe a total of 19,000 staff around the world by 2016 in a radical shake-up which comes after its profits fell earlier this year

In 2008 it was forced to seek a bailout from the Middle East as its investments division threatened to drag the whole bank down in the same way as the Royal Bank of Scotland and other British banks.

The changes will see Barclays hive off its European retail banking business into a so-called 'bad bank', comprising £115 billion of 'non-core' assets.

The non-core unit groups together businesses which do not fit the bank's 'strategic objectives' or profitability criteria under the review and the bank will 'look to exit or run down these assets over time', it said.

 

Mr Jenkins said: 'This is a bold simplification of Barclays. We will be a focused international bank, operating only in areas where we have capability, scale and competitive advantage.

'In the future, Barclays will be leaner, stronger, much better balanced and well-positioned to deliver lower volatility, higher returns and growth.'

 

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Former Barclays chief executive Bob Diamond with players of Chelsea FC receiving the Premier League trophy at Stamford Bridge in 2005

END OF THE DIAMOND ERA: AXE FALLS ON DEFIANT BOB'S EMPIRE

Ex-Barclays boss Bob Diamond became the face of the City's defiance in the wake of the financial crisis

The spectacle of millionaire investment bankers being told to clear their desks by Barclays marks the end of the era at the bank personified by Bob Diamond.

One of the world's richest and most successful bankers, the high-flying American was once described as the 'unacceptable face of banking' by Lord Mandelson.

As the head of Barclays Capital he built the investment division so dramatically that Barclays was one of the few banks not to have to be bailed out by the taxpayer.A controversial figure, he became chief executive of Barclays in January 2011 with a salary of £1.3million and repeated rows about the size of his bonuses.

But within days he sparked outrage with a claim that four years after the financial crisis, bankers could stop apologising for their role in the disaster.

'There was a period of remorse and apology for banks and I think that period needs to be over,' he told MPs.

But he quit in 2012 in the wake of explosive revelations of interest rate-rigging.

Investment banking has been heavily criticised for its large bonuses and appearance of irresponsibility.

Finance director Tushar Morzaria announced on Tuesday that about 450 directors and managing directors had been made redundant in the first quarter as it was revealed profits had fallen by five per cent.

In February the bank faced criticism after it was announced staff in its investment arm will get an average bonus of £60,100 per employee for 2013, despite the lender unveiling a 32 per cent drop in underlying annual profits.

The group hiked its bonus pool by 10 per cent to £2.4billion for last year. It said its investment banking staff would share £1.57billion in bonuses, up 13 per cent from £1.39billion in 2012.

It was the investment banking sector which produced the financial devices which underpinned a boom in the American ‘sub-prime’ property market and which then threatened the whole global financial system with crash in 2008 when the US housing market started to fall.

The bank has already announced job losses across the group of 12,000 for this year, but this has been increased to 14,000 as a result of the investment bank changes announced today. It brings the total cuts by 2016 to 19,000.

It comes two days after Barclays announced that first quarter earnings from the division fell by half, meaning profits at the group slid by 5 per cent.

The changes will dramatically shrink the importance of the investment bank, which currently accounts for more than half of Barclays' size, to no more than 30 per cent by 2016.

This division employed around 26,200 staff - around 10,000 in the UK - at the end of last year, but this had already shrunk to about 24,000 over the start of 2014.

Barclays did not give a breakdown of where the axe would fall when it announced 12,000 job cuts earlier this year.

But with more than 2,000 gone from the investment bank this year already and 7,000 more announced today, the investment bank looks likely to have shrunk by 10,000 or more - from its size at the end of last year - by 2016.

Highly paid staff at the division have been at the centre of controversy at Barclays, which last month received a bloody nose from shareholders as it hiked the staff bonus pool by 10% to £2.38 billion last year despite profits falling by a third.

The Institute of Directors has complained that this was nearly three times the £859 million paid out in dividends to shareholders.  

 Dominic Hook, Unite national officer, said: 'These have been extraordinarily turbulent times for ordinary Barclays workers who have worked hard to keep the bank on track against a backdrop of continued uncertainty and redundancies.

'The bank needs to recognise their tireless work to put customers first while jobs have been lost and give reassurances over their futures.'