British bank Barclays will cut about 3,000 jobs this year as the industry grapples with tougher regulation and the impact of a spreading debt crisis on investment banking operations.
First-half profits at the bank fell by a third after a drop in bond trading activity at its Barclays Capital investment bank and a charge to compensate customers who were mis-sold insurance. These factors offset a big improvement in bad debt charges. Weakness at Barclays Capital had continued into July, the bank said.
Group pre-tax profit for the six months to the end of June was £2.64 billion, down 33% from a year ago but above the average forecast of £2.4 billion among analysts.
Barclays Capital's half-year profit fell 9% on the year and revenue at the investment banking arm was down 11% to £6.26 billion, led by a fall in fixed income revenue.
That drop was less steep than at most rivals, however, after revenue across the industry slumped in the second quarter due to the euro zone debt crisis. BarCap's income in the second quarter was down 14% from the previous quarter and first-half revenue from fixed income, currencies and commodities (FICC) was down 20% from a year ago.
New CEO Bob Diamond, the American who built BarCap into a debt market powerhouse over the previous decade, told reporters the bank had already cut 1,400 jobs during the first half and that the tally was likely to rise to about 3,000 by the end of the year.
Barclays joins a growing line of banks, including HSBC, Goldman Sachs, Credit Suisse and UBS to announce jobs cuts in recent weeks.
Diamond is aiming to cut £1 billion of annual costs and reckons he can generate more than £6 billion a per year of extra revenue by 2013 under a revamp plan.
First-half profits were helped by a 41% tumble in bad debt charges during the first-half to £1.8 billion. But Barclays took a £1 billion charge to cover compensation for the mis-selling of insurance policies in Britain, which had been signalled previously. Its underlying profit was £3.7 billion, up 24% on a year ago.
