Tags: Barclays | Capital | Cut | Jobs | Slow | Market

Barclays Capital to Cut Jobs in Slow Market

Wednesday, 01 Dec 2010 01:27 PM

The investment bank arm of British lender Barclays is set to cut hundreds of jobs after several months of slow activity across the industry could continue into next year.

"We have begun a consultation process in the UK to reduce headcount within Barclays Capital," a spokesman for BarCap said on Wednesday, adding it would "continue to hire selectively across those parts of the business that are growing."

He declined to say how many jobs would be cut.

BarCap cut about 400 back office jobs in Asia, Europe and the United States in August due to the market slowdown, a source said at the time.
Rivals have also cut jobs and were expected to continue to do so as markets stay tough.

BarCap's own analysts on Wednesday said industry conditions were "still soft" and predicted revenues may not bounce back next year.

"We estimate the investment banking revenue pool is down 14 percent in 2010 vs 2009, and currently predict flattish in 2011 vs 2010," the analysts said in a note, saying that is below average forecasts for a 5-10 percent rise next year.

Financial market jitters in the wake of Europe's debt crisis have hurt income at trading desks, while client caution has depressed fee income from capital raisings, hurting overall investment banking income in the past six months.

BarCap boss Bob Diamond, set to take over as group CEO next year, has been conducting a review of returns across the bank.

Barclays and other banks have raised base salaries for investment bankers after a backlash against big bonuses, but that has raised fixed costs and makes it harder to cut costs during slow periods without slashing jobs.

BarCap added about 3,000 staff in the year to the end of June, swelling the unit to about 25,500 employees.

Costs as a share of income are expected to be about 60 percent this year for the 20 biggest investment banks, below levels of near 65 percent before the financial crisis, but up from 56 percent last year, according to the research note from BarCap's analysts.

BarCap lost momentum this year after using the takeover of the U.S. operations of Lehman Brothers in 2008 as a springboard for expansion.

Its income fell to 2.8 billion pounds ($4.4 billion) in the third quarter, down 14 percent from the previous quarter, which itself was down 15 percent from the first quarter.

The third quarter was its weakest period since the Lehman deal and October was also weak, although November started better, it said.

It said fixed income, currencies, commodities, equities and prime services revenues fell last quarter, offsetting an increase in advisory income.

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