Barclays could axe as many as 3,500 investment bank staff and cut its advisory or equities operations in Asia as part of a broader strategic review aimed at fixing the bank's culture in the wake of the financial crisis.
The future shape and size of the investment bank is seen as the most critical part of Chief Executive Antony Jenkins' review, as it contributes more than half of group profits but conducts the "casino" activities politicians and regulators are cracking down on.
The British bank was fined $450 million in June for rigging Libor interest rates, which forced its chairman and chief executive to quit. Barclays' reforms are not expected to be as radical as those of rivals UBS and Royal Bank of Scotland, who are pulling back sharply, but sources say tough choices loom. Jenkins will need to take action to cut costs and ensure the business is profitable under tougher new rules, and show the public and politicians that he has tackled culture and conduct, they said.
Activities that make low returns or lack scale are at threat, and the bank has said it will also stop anything that may harm its reputation, like tax advisory and agricultural commodities trading. Jenkins is not due to unveil his "Project Transform" until February, but Project Mango, as the investment bank revamp has been named by the unit's boss Rich Ricci, is close to being wrapped up. "Barclays is at an interesting crossroad," analysts at BernsteinResearch said in a note to clients.
"On one hand, the bank seems likely to be one of the winners as competitors exit FICC (fixed income, currencies and commodities) ... on the other hand, the unit has faced increased hostility from regulators and investors alike, especially following the Libor crisis."