Barclays to Cut 19,000 Jobs Over 3 Years
This story definitely is a major cause for concern for prospective bankers and traders as well as those already working there. What do you think about this development? And if you may be affected by this, what are your thoughts?
A few prominent excerpts from dealbook (link below):
"Under plans outlined on Thursday, Barclays will be streamlined in four core areas: retail and corporate banking, primarily in Britain; the Barclaycard credit card business; banking in Africa; and investment banking. A number of weaker businesses – including the trading of physical commodities outside of precious metals and some branch networks outside of Britain – will be placed in an internal “bad bank” where they will be sold or run off."
"Barclays will also accelerate its cost-cutting effort. The bank had previously announced plans to cut its 140,000-person work force by about 8 percent, or 12,000 jobs, this year. It now plans to eliminate 14,000 positions this year and 19,000 in total over the next three years."
“The investment bank is a valuable asset to Barclays and its strength is a differentiator for us,” said Mr. Jenkins, who previously ran the bank’s retail operations. “In the current environment, it consumes too much capital, it does not generate sufficient returns and it is too large a proportion of the group. As currently constituted, it is an unacceptable drag on group returns.”
http://dealbook.nytimes.com/2014/05/08/barclays-to-cut-7000-jobs-in-inv…
But M&A advisory doesn't need any capital at all. (I guess stapled financing packages but still)
How will this affect advisory side of the bank?
Advisory definitely won't be as severely impacted as most FICC and equities desks. I think most of the cuts will come from these desks as well as their support teams. Just between the investment banking businesses in NY and London, roughly 27% of jobs will be cut.
Internal "bad bank"; that must be a real morale booster.
hahahahahahahahahahahahahaha
creative destruction
Most reporting I've found doesn't make the distinction between trading and advisory. Has anyone found a headcount on advisory cuts?
Nothing concrete out there but most conclude the majority of IB cuts will be across Eq and FICC. Advisory capacity should fare a little better but nature of deals is still up in the air if they can no longer throw their balance sheet around.
Even if there is no direct image on advisory, I can see a lot of the guys jumping ship from some of their stronger teams (PUI and Energy, UK M&A etc) also looking at other shops if the bank as a whole is seen to be deteriorating.
19,000k number is mostly cutting of retail banks across Europe and Africa... hardly anything to do with the Investment Bank. Barclays has a huge retail operation overseas (think JPMorgan Chase) that we don't see in the US, and this is where the vast majority of the headcount reduction will come from.
This doesn't really impact IBD. Investment banking and equities are their only two strong areas actually.
Within the investment bank per se FICC will be downsized, primarily in physical commodities trading which requires a lot of regulatory capital.
It will still affect IBD. They want to make a move away from that back to traditional retail banking.
Barclays is doing almost exactly what UBS did a few years ago; I would expect a similar outcome. Any energy trading will most likely be sold off and any other capital intensive operation will as well
seems like Barclays is about to get out of Investment Banking area, probably just a Retail Bank from now on
Wtf? Dude read the financial reports. The INVESTMENT BANK is by far the biggest money producer, alongside Barclaycard. It is the retail banks that they are shedding.
Within the Investment Bank, they are reducing certain flow businesses that are losing money (FICC) / are too reg capital intensive. IBD is doing great. I'm not calling you out but ppl on this thread are giving opinions without reading Barclays' financial statements. Look at the facts. Barclays has already laid off over thousands of people and 80% of them are not in the IB. And the people getting laid off in the IB are not IBD.
This is definitely incorrect. Margins on advisory are typically always high and I doubt they would cut it
dont be pissed because you did not land SA position yet Barclays has nothing to do with it none of the banks wanted you mate.
Looks like Barclay's is anticipating a recession or some sort of macroeconomic distress.
would this also mean no hiring as well?
You college kids are overreacting, only 3500 are front office and of that 90% are FICC. There will be hirings in equities and advisory as more capital will be allocated to the less intensive higher margin businesses. The financial media live off this type of hype but no its not anything that wont happen eventually i.e. The firings will happen at DB next.
Have any of you kids insisting IBD won't be affected read the WSJ article? Barclays has made a strategic decision to scale back their investment bank. Before you sprout of on WSO please read about what you're arguing.
you are crazy if you think that IBD won't be impacted in a significant way; the departure of McGee and Parker is emblematic of a shift.
This. The departures may be symptomatic, but either way if I were a Barclays IBD employee I'd be far more worried about losses of several significant heavy hitters than about a fuzzy broad corporate HC reduction across the pond
Here is a quote from DealBook of New York Times:
"In New York, Barclays bankers expressed guarded relief that the bank’s mergers and acquisitions, corporate finance and capital markets businesses appeared to be safe, with the job cuts falling mainly in fixed income."
http://dealbook.nytimes.com/2014/05/08/barclays-to-cut-7000-jobs-in-inv…
This is nothing new. Barclays has been laying people off for the better part of a decade.
These cuts will hit trading, but I see a lot of regulatory headwinds in general for IBD. M&A will become harder to get regulatory approval for. IPOs will require capital. And with fewer institutional clients, it will be harder to place issuances.
Relax. We're all screwed. Everyone in finance should learn plumbing or electrical work, just as a backup.
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