Barclays says it will cut 12,000 jobs this year

London: Barclays Plcexpects to axe up to 12,000 jobs this year to cut costs and counter falling income at its investment bank, where profits slumped last year.

But it is also paying staff higher bonuses, risking a backlash from the politicians and taxpayers who bailed out much of the industry during the financial crisis.

The bank said on Tuesday that 7,000 of the jobs will go in Britain and half of the affected staff there had already been notified. The latest cuts are not concentrated in any single business area.

Chief Executive Anthony Jenkins, who took the helm in 2012 after an interest rate rigging scandal, is pulling Barclays out of some investment banking activities as part of efforts to clean up standards and improve returns. The bank last year targeted 1.7 billion in annual cost savings.

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[caption id=“attachment_75957” align=“alignleft” width=“380”]  Jenkins could face a backlash for offering bonuses to employess. AP[/caption]

It said it paid 2.4 billion pounds in incentive awards last year after raising bonuses in its investment bank by 13 percent despite the profit decline.

That helped to lift Barclays’ compensation-to-income ratio to 43.2 percent last year from 40 percent in 2012. It said it was still aiming for a compensation ratio in the “mid-30s”.

Jenkins defended the increases, saying Barclays had to compete with global rivals to recruit the best staff. He said the bank was having constructive talks with investors over pay.

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“We need to recruit people from Singapore to San Francisco. We need the best people in the bank to drive long-term sustainable returns for our shareholders,” Jenkins told reporters on a conference call.

Shares in Barclays were down 1.9 percent at 0830 GMT.

EARNINGS MISS FORECASTS

The bank had already released headline results showing its earnings dropped to 5.2 billion pounds last year, down 32 percent from 2012, falling short of analyst forecasts as investment bank revenue slumped in the fourth quarter.

Profits at the investment bank slumped 37 percent to 2.5 billion pounds, as income fell 9 percent on the year to 10.7 billion pounds due largely to a decrease in fixed income.

Barclays said it expects to improve its leverage ratio to at least 3.5 percent by the end of next year as it reduces its balance sheet.

Its leverage ratio improved to just under 3 percent by the end of the year from 2.2 percent at the end of June. The UK regulator forced Barclays to raise 6 billion pounds from investors in October to improve its leverage ratio.

The bank said it remained committed to paying out 40-50 percent of its adjusted earnings in dividends.

Barclays said it had cut its balance sheet by 196 billion pounds in the second half of last year, significantly more than the 65-80 billion reduction it had targeted, helped by foreign exchange movements.

It said it would aim to cut at least another 63 billion pounds to get the balance sheet below 1.3 trillion pounds, based on the UK regulator’s calculation of leverage exposure.

Reuters