Barclays will cut an estimated 19,000 jobs by the end of 2016. By the end of the year the British bank will drop an estimated 14,000 jobs, which is 2,000 more than previously announced earlier this year. The bank plans to expedite the process in an attempt to reduce costs on employee spending.
This new information comes to light as Barclays is making an attempt to reform its image after their scandal under former chief executive, Robert Diamond. The scandal involved the manipulation of libor, or interest rates, on mortgages, credit cards and student loans. The bank was caught cheating people out of money by changing interest rates, thus increasing the amount of money people paid through the life of their lines of credit. The bank eventually paid a total of $450 million in penalties for its illegal practice.
“This is a bold simplification of Barclays,” said Anthony P. Jenkins, Barclay’s chief executive. “Regulation has become much clearer and the impact of regulation on the investment banking business,” Jenkins added. “We also believe that the economic environment has depleted for the fixed income, currencies and commodities (FICC) business. Some of the problems are structural as well as cyclical.”
What does the future hold for Barclays?
Barclays revealed today that it will move forward and be streamlined in four areas including: retail and corporate banking, banking in Africa, investment banking, and through the Barclaycard credit card business. Therefore, if you’re concerned about the status of your credit card, you should not worry, as the bank plans to conduct business as normal with its credit card division.
Business operations for Barclays is going to be cut in other divisions of the bank, including the trading of physical commodities, which will be sold or run off after being placed in an internal “bad bank.”
Brooklyn Nets basketball fans should not worry either, as there are no plans from Barclays to cut its business operations at the Barclays Center.
How do investors feel about this?
Last year Jenkins stated he would make an attempt towards drastic change for the bank to help rebuild its reputation. He claimed he would restructure the bank by changing its culture.
Investors voted in favor of the restructuring and employee cuts. Confidence was further reinforced as shares of Barclays rose just under five percent this Thursday morning.
How do you feel about this decision to restructure Barclays?