The spectre of wide City job cuts was raised today as Barclays said it was looking to reduce costs as it tries to move on from the regime of former chief executive Jes Staley.
The high-street lender suffered a slowdown at its investment bank and a rise in bad debts — profits fell 4% in the third quarter to £1.9 billion.
Last week the Financial Conduct Authority fined Staley £1.8 million and banned him from holding senior City roles after ruling he had failed to disclose the true extent of his “close personal relationship” with deceased sex offender Jeffrey Epstein.
During his controversial reign, Staley won plaudits for beefing up Barclays’ investment bank, making it a serious Wall Street player. Today his successor CS Venkatakrishnan said he was looking to cut costs with more details to come in February.
He said: “We see further opportunities to enhance returns for shareholders through cost efficiencies and disciplined capital allocation across the group.” With a dearth of deal making and new floats blighting the Square Mile, cuts at Barclays are likely to be echoed across the City, leading to potentially thousands of investment banking job cuts.
Profits from corporate and investment bank fell 11% in third quarter reflecting “lower client activity”, although Barclays did take part in the $65 billion float of Arm in New York. Fixed income trading revenue fell 26%, a bad sign for bond trading desks in London and New York. Venkat, as he is known, refused to discuss the Staley issue or whether there remains pressure on the rest of the board, including chairman Nigel Higgins.
“I really am not going to comment on that,” he said. Staley and he had once been close. The bank set aside £433 million to deal with possible debt defaults, up from £381 million last time. Again, if repeated across town, that is a worrying sign for the wider bank trade, although the figures were a bit better than City analysts had feared. Barclays is also fighting tough competition on the high street for customer deposits.
Its NIM — net interest margin, the difference between what it pays on deposits and charges on loans — will come in a bit lower than thought at between 3.05% and 3.1%. That suggests customers are switching out of lower interest rate accounts.
Barclays shares were the biggest faller on the FTSE 100, down 10p, 7%, to 134p. Other banks — NatWest and Lloyds which reports results tomorrow — followed suit. Barclays said there will be revised financial targets alongside news of cost cuts in February’s full-year financial results. That shake-up may results in “material additional charges” it warned.
Venkat became CEO in November 2021 when Staley quit amid the FCA investigation. Staley has said he will appeal against the FCA decision.
