Barclays to cut 3,000 jobs as profit sags

Barclays is set to cut about 3,000 jobs this year to reduce costs and expects financial markets to stay tough after a drop in bond trading and an insurance mis-selling charge cut first-half profit by a third. The British bank's performance was more resilient than rivals, however, as bad debts tumbled and it kept costs steady.
Chief Executive Bob Diamond, the American who built investment banking unit BarCap into a debt market powerhouse over the previous decade, said Barclays had cut 1,400 jobs during the first half and the tally was likely to rise to about 3,000 by the end of the year. The staff cuts amount to about 2 percent of Barclays' total workforce of 146,100. Half the cuts so far in 2011 were at BarCap, which shed the same number in the second half of last year. The lay-offs reverse an aggressive build-up that included its 2008 take-over of the US arm of Lehman Brothers and equities and advisory expansion. BarCap has 24,100 staff.
Barclays joins a growing line of banks, including HSBC, Goldman Sachs, Credit Suisse and UBS to slash thousands of jobs in recent weeks. Pretax profit for the six months to the end of June was 2.6 billion pounds ($4.3 billion), down 33 percent from a year ago but above the average forecast of 2.4 billion pounds among analysts polled by the company.
Shares in Barclays were up 2.8 percent at 223 pence at 1350 GMT, outperforming a 1 percent fall by the European bank index, as worries the euro zone crisis will spread rattled banks in Italy in particular.
Diamond is aiming to cut 1 billion pounds of annual costs and reckons he could even double that goal, as well as generate more than 6 billion pounds per year of extra revenue by 2013 under a revamp plan. The bank's return on equity improved to 9.1 percent in the first half from 6.9 percent a year ago. Diamond is targeting a level of 13 percent by 2013.
BarCap's income fell to 2.9 billion in the second quarter, down 14 percent on the first quarter, but BarCap's co-CEO Rich Ricci said he remained confident it can hit its targeted 3.5-3.6 billion pounds of quarterly income in normal market conditions. Fixed income trading plunged across the industry in the second quarter as the euro zone debt crisis curtailed activity. BarCap's fixed income, currencies and commodities (FICC) income in the second quarter fell 22 percent from Q1, although most rivals had shown a drop of a quarter to a third.