Third time lucky

8 May 2014 By George Hay Follow @gfhay

After a few false starts, Antony Jenkins is radically shrinking the UK lender’s investment bank, cutting 27 pct of the unit’s staff. Investors see a re-rating as Barclays rebalances to higher quality earnings. But Jenkins still has to prove his boldness will lead to good returns.

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Barclays is to shed 7,000 investment bank roles by 2016, the UK lender said on May 8.

Launching a strategic revamp, Barclays’ Chief Executive Antony Jenkins committed to exit or run down 115 billion pounds of risk-weighted assets across the group, including 90 billion pounds in the investment bank, or 41 percent of the unit’s total. RWAs in the investment bank at the end of the first quarter were 219 billion pounds.

Barclays expects the core investment bank to constitute no more than 30 percent of total group RWAs by 2016, compared to over 50 percent now.

The bank also revised several other targets upwards. It said its fully loaded core Tier 1 ratio would exceed 11 percent by 2016, and its leverage ratio would exceed 4 percent by the same date. Return on equity is projected to be above 12 percent in 2016, while the drag from the bank’s non-core division is targeted to be below 3 percent.

In total, Barclays will cut 14,000 jobs worldwide in 2014, with an extra 5,000 by 2016.

The shares rose 5.6 percent to 257 pence on the morning of May 8.

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