News Column

Barclays axes 12,000 jobs but bumper bonuses for executives

February 12, 2014

Adam Bouyamourn

Barclays said it would cut 12,000 jobs worldwide yesterday even as it disclosed a bumper bonus pot of 2.4 billion (Dh14.5bn) for its staff up 10 per cent from last year.

The British bank, which received capital injections from Abu Dhabi and Qatar at the height of financial crisis to avoid being nationalised by the United Kingdom's government, aims to cut costs by 1.7bn by 2015.

Barclays last year disclosed its intention to sell its retail operations in the UAE, but intends to retain its corporate banking services, with investment and private banking arms located in the Dubai International Financial Centre, and a further private banking branch in Abu Dhabi.

The company has 600 employees in the UAE, but their jobs would not be affected by the cuts, Barclays said.

The bank's fourth-quarter adjusted pre-tax profits fell to 194 million in the fourth quarter of 2013, compared to adjusted pre-tax profits of 1.09bn in the same quarter a year earlier. This figure was affected by a one-off charge of 330m to settle lawsuits and regulatory penalties.

Mounting fines and regulatory set-asides have eaten into Barclays' margins, as the impact of mis-selling of payment protection insurance, and settlements over the fixing of the London Interbank Offered Rate (Libor), the interest rate at which London-based banks loan funds to one another, are felt on the company's balance sheet.

"It's a grossly inappropriate time to increase variable compensation [bonuses] by 200m," said Ian Gordon, the head of banks research at Investec, an asset management group. "The rise appears to be taken in isolation from the underlying business performance."

Mr Gordon said that for Barclays to reach its 1.7bn cost-cutting target, much of the heavy lifting would have to be done by the investment bank. But the size of Barclays' bonus payouts suggest that management's "willingness and capability" to make cuts to the bank's investment arm may be lacking.

"It's revenue flat and costs up, without an adequate explanation for why, or a forward-looking explanation as to what transforms that story going forward," said Mr Gordon.

"Our industry is going through what I regard as a 100-year transformation," said the chief executive Antony Jenkins.

Barclays is also under investigation by Britain'sFinancial Conduct Authority for alleged fixing of the eurodollar market, the Financial Times reported last November. Barclays' share price dropped by 4.85 per cent during mid-afternoon trading in London yesterday.

* With Bloomberg News

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Source: National, The (United Arab Emirates)

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