Barclays PLC, under pressure to boost returns, will eliminate 7,000 jobs at its investment bank, about a quarter of the total, and signaled its effort to build a global bank is over.
CEO Antony Jenkins' plan will bring the number of jobs to be cut across the firm by 2016 to 19,000, including the 12,000 the lender said in February it would eliminate this year. Barclays will create a bad bank to dispose of £115 billion ($195 billion) of assets, including its European consumer arm. The investment bank will primarily target the U.K. and U.S., and serve fewer clients, while its Asian unit will be “more focused,” Mr. Jenkins told reporters Thursday.
“The investment bank is too exposed to volatility in fixed income, currencies and commodities, and the group is too exposed to volatility in the investment bank,” Mr. Jenkins told analysts on a conference call.
Mr. Jenkins has been under investor pressure to cut costs at the investment bank created by his predecessor, Robert Diamond. The unit this week posted a 49% drop in first-quarter profit, as revenue from FICC, traditionally its biggest source of income, dwindled.
Mr. Jenkins said Thursday that market faces a structural rather than a cyclical decline and that investment banking revenue will be “weak for some time.”
The plan will cut the investment bank's share of the firm's assets to 30% by 2016 from about 50%, Barclays said.
Barclays's bad bank will hold £90 billion of risk-weighted assets from the investment bank, including complex derivatives from its FICC operation and some emerging market specific products.