Barclays shares jump 4% on £1.7bn cost-cutting plans

12 Feb 2013 | 07:48
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Barclays shares have jumped after the bank announced it will cut 3,700 jobs this year following a strategic review, as pre-tax profits plunge due to mis-selling claims.

The cuts will include 1,800 jobs at its investment bank and 1,900 in European retail and business banking. Barclays currently employs 140,000 staff.

It said the job cuts would result in a restructuring charge of close to £500m in the first quarter of 2013. The cutbacks are aimed at reducing costs by £1.7bn a year by 2015.

Investors reacted positively to the news, sending Barclays shares to the top of the FTSE 100 leaderboard in early trading.

The bank's share price rose 4.4% to 315p, with the FTSE 100 flat at 6,271.

Announcing the plans alongside its annual results, Barclays reported a steep drop in pre-tax profit, down from £5.9bn a year ago to £246m in 2012.

Barclays had been forced to set aside money for compensating customers mis-sold products, and also suffered a loss on the value of its own debt.

However, on an adjusted basis, profits rose 26% to £7.05bn, in line with analysts' expectations.

Barclays has been rocked recently by LIBOR and mis-selling scandals. New chief executive Antony Jenkins, who replaced Bob Diamond in August, has pledged to transform the banking group.

"The behaviours which made headlines during the year stemmed from a period of 20 years in banking in which the sector became too aggressive, too focused on the short-term, and too disconnected from the needs of customers and clients, and wider society," Jenkins said.

"Barclays was not immune from the impact of these trends, and we suffered reputational damage in 2012 as a consequence. Change is needed both in our industry and at Barclays."

The bank also confirmed it was closing its Structured Capital Markets business, a controversial unit which has hit the headlines for its aggressive tax avoidance strategies. 

Categories: Regulation

Topics: Barclays

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