Investment Banking and Brokerage

Barclays cuts Asian cash equities as axe swings in global cull

Martin Arnold and Don Weinland
Adam Jeffery | CNBC

Barclays is to exit cash equities in Asia, part of a broader retrenchment expected to lead to more than 1,000 job cuts across its investment bank, as new chief executive Jes Staley makes his first big strategic move.

Clients were informed in a memo on Thursday morning that the UK bank was shutting cash equity research, sales and trading as well as convertible bond trading businesses across all Asian countries — a cut resulting in 230 job losses. "Research sales and related activities in Asia will cease immediately," it said.

The extent of the cull globally, which could be announced as early as Thursday, will be presented as an extension of the strategy announced by the previous chief executive, Antony Jenkins, in 2014, when he promised to cut 7,000 jobs in the investment bank over three years.

Why financial services face many changes
Why financial services face many changes

Barclays plans to exit investment banking operations across much of Asia and in parts of Europe and Latin America as it focuses on its core US and UK markets, according to people familiar with the matter. The bank declined to comment.

The move mirrors cutbacks at several European rivals, such as Deutsche Bank and Royal Bank of Scotland, and reflects tough market conditions for all investment banks as they grapple with stiffer regulations and a decline in fixed income trading.

Mr Staley, who joined Barclays at the start of December, is expected to outline his broader strategy when the bank reports annual results on March 1. He is reviewing whether to keep the lender's large African operations.

Barclays is also closing its operations in Taiwan and South Korea. It said its derivatives and hedge fund servicing businesses would continue to operate as before across the region.

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Some investors and politicians interpreted the arrival of veteran US financier Mr Staley as a sign that Barclays was preparing a bullish strategic shift to rebuild its investment bank after several years of trimming it back.

However, before taking charge he backed the plan that was already being drawn up to refocus Barclays' trading operations on its core US and UK markets. He aims to cut 10-20 per cent of costs in the investment bank, including shutting much of its operations in Russia and Brazil.

Mr Jenkins, who was fired after three years as chief executive in July, took two shots at restructuring the investment bank, promising to cut a quarter of the unit's 28,000 jobs and shrink its share of group capital from half to a third.

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The latest job losses are expected to be on top of the 7,000 announced in 2014. Barclays investment bank had 20,500 staff at the end of 2014.

John McFarlane, chairman of Barclays, gave a strong hint that more reductions were being planned last year when he said: "We don't want to be a 100-country investment bank," adding that the lender's Asian operation "is not performing and we don't like things that actually don't make money".