Barclays Cuts 3,700 as Bank Industry Troubles Continue
Barclays PLC (NYSE: BCS) announced poor 2012 earnings and promptly fired 3,700 people. Management said that results were hurt by bad payment protection on loans and credit cards. Other banks likely will follow suit as regulators look into shady practices that relate to Libor and other rate fixing. The Barclays job cuts are likely early in a long line of "downsizing" that could cost the industry tens of thousands of jobs.
Barclays said two important things about its business.
STATUTORY PROFIT BEFORE TAX DECREASED TO £246M (2011: £5,879M), INCLUDING OWN CREDIT CHARGE OF £4,579M (2011: GAIN OF £2,708M), GAIN ON DISPOSAL OF BLACKROCK INVESTMENT OF £227M (2011: IMPAIRMENT⁄LOSS OF £1,858M), £1,600M (2011: £1,000M) PROVISION FOR PPi REDRESS, AND £850M (2011: £NIL) PROVISION FOR INTEREST RATE HEDGING PRODUCTS REDRESS
In 2013, reduce headcount by at least 3,700 across the Group, including 1,800 in the Corporate & Investment Bank and 1,900 in Europe Retail and Business Banking. This is expected to result in a restructuring charge of close to £500m in Q1 2013;
CEO Antony Jenkins tied the layoffs to efforts to improve financial results, but his comments about the bank's brand were not separated by much from his announcements of the terminations. That makes it appear that jobs were sacrificed to improve the image of Barclays and to somehow make the financial firm cleaner:
Our plan is built on a rigorous review of 75 distinct business units to determine not only their ability to generate an appropriate and sustainable return on equity, but also their strategic attractiveness, including their impact on Barclays reputation. We expect to make good progress towards our financial commitments by 2014 and deliver them fully during 2015.
Do good and do well by letting the help go.
There are enough large global banks that have similar earnings and balance sheet problems related to bad and illegal behavior that to dodge the worst financial fallout may involve cutting huge numbers of jobs. Behind the need to pay out penalties is the need to make up for them in financial results. Job reductions are among the few things banks can do to bring down ordinary expenses when the cost of extraordinary bad behavior is so high.
Filed under: 24/7 Wall St. Wire, Banking Tagged: BCS, featured