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Barclays to Axe at Least 3,700 Jobs in 2013

Antony Jenkins, chief executive officer of Barclays PLC.
Carl Court | AFP | Getty Images
Antony Jenkins, chief executive officer of Barclays PLC.

Low, single digit growth should be expected while the economic environment remains muted, Barclays CEO Antony Jenkins told CNBC on Tuesday after the group announced it would cut at least 3,700 jobs in 2013 as part of a strategic overhaul.

"The macro economic environment is quite muted so we don't expect there to be huge top line growth. Low to mid-single digits is what we expect," Jenkins said.

The group will cut 1,800 jobs in the Corporate and Investment Bank and 1,900 in Europe Retail and Business Banking. It also confirmed it will close its controversial Structured Capital Markets (SCM) tax-related business which has come under fire in the past for aiding clients in tax avoidance. It is aiming to reduce the group's annual costs by 1.7 billion pounds ($2.7 billion) by 2015.

Jenkins said the SCM business was no longer compatible with the bank's "values and purpose going forward."

"It is absolutely appropriate that we should help our clients take into account the consequence of tax when they do underlying transactions what we're not doing going forward is transactions where the sole economic benefit is tax. it's a very powerful signal of the way we're running Barclays in the future," he said.

The sweeping changes came as the group announced 2012 pretax profit of 246 million pounds ($385 million), down sharply from 5.9 billion pounds in 2011 as the full toll of charges for compensating customers for mis-sold financial products and a reduction in the value of the bank's debt became clear.

Jenkins admitted that the financial crisis had changed the industry significantly and damaged the reputation of the sector.

"The big powerful forces that drove the industry forward over the last 20, 30 years are either stalling or reversing, lower economic growth, more regulation and less globalization. We cannot have vibrant economies without a vibrant banking sector. Banks became too aggressive and too self-serving, responsibility upon us [in banking] is greater than other entities [in society]. We have to change," he said.

He dismissed the lukewarm response from some analysts that the planned headcount reduction is too low and the changes do not go far enough.

"Critically for us we are committed to bring our cost base down and that's an absolute reduction. It is bold enough. The analysts haven't had time to digest what we're launching today. I'm confident once they do they'll appreciate it," he said.

Cormac Leech , Bank Equity Researcher at Liberum Capital said the numbers came in lower than already low expectations but a relief rally was taking place in the Banks shares.

"There were some concerns that there might be some skeletons in the closet or kitchen sinking that doesn't seem to have come through so this morning there has been a relief trade. He added that the bank faced a turbulent future.

" The Key problem is that [Barclays] is a fixed income powerhouse and that is not where you want to be in the next 3-5 years with various regulatory issues including ring-fencing. There are a lot of headwinds in the business that Barclays is strong. Strategically, Barclays is the wrong shape," he added.

The group said it would focus on markets where it has "scale and competitive advantage" and would focus on investment in the U.K., the U.S. and Africa while maintaining what it described as an "appropriate presence" in Asia and Europe.

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