Barclays cut between 5% and 10% of its capital markets, advisory and other investment banking units in the U.S. yesterday, just days before bonuses are scheduled to be announced, a source within the bank told eFC.
The cuts ran the gamut in terms of seniority, affecting first-year associates through director level. The source had no knowledge of anyone on the managing director level being cut.
Barclays declined to comment.
In an unusual and somewhat brutal move, the eliminations included first-year investment bankers, said the source. Normally graduates who join Barclays in investment banking keep their jobs for a minimum of two years to "assess whether they like the job and perform before they are considered to be put under the chopping block," the source said. "Now banks evaluate people as soon as they walk in the door."
The cuts come just before bonuses are due to be announced on Friday, according to a source in the bank, and those laid off won't be eligible to be paid bonuses. That will save Barclays millions of dollars.
"If there is a fully discretionary provision, there is really no recourse for the employee," said Joanne Seltzer, a partner in the New York City office of Jackson Lewis LLP. Seltzer wasn't specifically commenting on Barclays cuts.
As is the practice at many banks governed by U.S. employment laws, Barclays made its job cuts with efficiency. "They call your desk, you go to your manager's office, he says you're being let go. You can't talk to anyone, and they tell you that if everything doesn't go to plan, security is standing by," the source said.
"It's like an execution."
The firm will also lay off an additional 275 investment banking employees in May as part of its strategic review, according to Bloomberg Businessweek. This week's cuts were based on performance; the May cuts will be layoffs, the source said.
Pretty dick move to do it right before bonuses. They should at least be entitled to a portion.