Today, London’s financial sector has been made very aware that there are some very revolutionary corporate restructures on the horizon, as financial giant Barclays prepares to let 19,000 members of staff go.
There has been no shortage of commentators willing to air their professional opinion, one of which was IG Group’s Chris Beauchamp, who presented his analysis via video on mainstream British news source The Daily Mail, began his commentary by stating that IG Group’s own recent announcements pale into insignificance compared to the vast restructuring that Barclays is set to undergo.
Today, LeapRate announced that Barclays, one of the world’s largest FX dealers, has set its sights on cutting between 6,500 to 7,500 jobs in its investment banking division, and is unlikely to recruit more FX traders for the foreseeable future.
It has since emerged that the entire number of potential casualties across the Barclays group could total 19,000, and that it will offload its entire European operations, representing another jetisoning of whole business units after it shed its commodities operations recently.
Mr. Beauchamp, a Market Analyst at IG Group, broadcast that Barclays “is still playing catch up with its turn-around plan” and that it is one year into a five year plan which was set about by CEO Anthony Jenkins, with Mr. Beauchamp casting some questionability as to whether Mr. Jenkins will still be in his leadership post four years from now to see the end of the proposed plan.
Further, Mr. Beauchamp stated that one of the largest contributing factors toward the bank’s difficult situation has been fixed income credit currencies, in a similar way to the bank’s US based counterparts.
He continued “the investment banking division is less active, and certainly far less so than the heady days of the Bob Diamond era.”
Mr. Beauchamp’s commentary was highly critical of Barclays’ method of restructuring, stating that these measures are “too little too late, and the bank should have hived off the bad banking business years ago to try to get a head start, but it is too late for that now” and that the effect on the share price now dictates that investors have to stay with the bank long term.
Mr Jenkins made clear to the Daily Mail that 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” continued Mr. Jenkins.
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.
Today, LeapRate reported that Barclays FX traders in London are generally in receipt of higher remuneration packages than their peers at HSBC and RBS, banks which are also party to the lion’s share of FX order flow, and that there is a general consensus that RBS and HSBC offer poor packages to their traders, despite far better corporate performance.
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.” Whether this was backed with the conviction of a true leader, or pure soundbite is yet to be proven, as Britain’s governmental grasp of fiscal policy has been somewhat questionable since Margaret Thatcher’s departure 24 years ago.
Mr Diamond resigned just days after Mr. Cameron’s remarks, to be replaced by Mr Jenkins who has spent two years overhauling the firm.
Video courtesy of The Daily Mail