Tags: Barclays | Capital | Cuts | Jobs

Barclays Capital Cuts 400 Jobs as Slowdown to Squeeze Banks

Thursday, 12 Aug 2010 01:11 PM

Barclays Capital is to cut jobs across the world after a slowdown in activity, in a move bankers expect to be matched by rival investment banks in Europe and on Wall Street if markets stay tough.

The unit of British lender Barclays will cut about 400 back-office jobs in Asia, Europe and the United States, a person familiar with the matter said on Wednesday.

"It is inevitable as we move towards the end of the year, there are going to be redundancies across the board. Most of the big firms will have to trim at some point," said Jonathan Evans, chairman of recruiter Sammons Associates.

BarCap's revenues fell 15 percent in the second quarter from the first, and many rivals posted even steeper declines.

Income for global investment banks was down by an average of about a third in the second quarter from the first quarter, analysts said, with falls across fixed income, currencies, equities and M&A advisory desks.

Some of steepest drops came at banks that have done best during the crisis, such as Goldman Sachs, whose revenues tumbled 36 percent.

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 second quarter.

Volumes in Europe's equity capital markets — where companies raise capital in public offerings and other types of equity sales — have dropped by 40 percent so far this year compared with a year ago, Thomson Reuters data shows.

In debt capital markets, the decline is 22 percent over the same period. The only rise is in mergers and acquisitions volumes, by 17 percent, the data shows.

This will result in job cuts across the industry in the next two months if there is no pick-up in the third quarter, bank industry sources have told Reuters, as the dearth of deals forces banks to cut costs after an aggressive expansion drive.

A spokesman for BarCap confirmed it had begun a consultation with staff in some infrastructure functions "which will result in some job losses". It will continue to hire selectively in parts of the business that are growing, he said.

BarCap's costs rose faster than expected in the first half of this year. It has grown fast in the past two years, using its purchase of the U.S. operations of Lehman Brothers to build an Asian and European equities and advisory business. It had 25,500 staff at the end of June, up from 21,900 a year earlier.

"Some rationalization of back office functions is entirely plausible. However, we see no prospect whatsoever of a reversal of the strategic expansion," Exane BNP Paribas said in a note, referring specifically to Barclays.

© 2017 Thomson/Reuters. All rights reserved.

 
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Barclays Capital is to cut jobs across the world after a slowdown in activity, in a move bankers expect to be matched by rival investment banks in Europe and on Wall Street if markets stay tough. The unit of British lender Barclays will cut about 400 back-office jobs in...
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2010-11-12
Thursday, 12 Aug 2010 01:11 PM
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