- Previous hiring freeze was in place until end of the year
- Barclays said to have cut net total of 3,000 jobs since 2012
Barclays Plc’s Chief Executive Officer Jes Staley has extended a freeze on hiring new staff indefinitely as he deepens cost cuts to boost profitability at Britain’s second-largest lender, according to people with knowledge of the decision.
The CEO said he will keep the ban in place “for a long time” at a townhall meeting in London on Dec. 2, said the people, who asked not to be identified because the meeting was private. A previous freeze, implemented by Chairman John McFarlane in September, was due to be reviewed in January, said one of the people, who asked not to be identified because the move isn’t public. The current restrictions may be revisited in March.
Staley, who took charge on Dec. 1, is considering whether to cut an additional 20 percent of staff at the investment bank, the lender’s most expensive and least profitable division, people familiar said last week. The heaviest losses will come in Asia and the global cash equities business, which are not competitive enough, according to the people, as the company focuses on businesses in the U.K. and the U.S.
Joanne Walia, a spokeswoman at Barclays, declined to comment.
Barclays has cut a net total of about 3,000 positions since 2012 because it continued “hiring tens of thousands of people every year” during its job-reduction program, Staley told staff at the townhall meeting, according to the person. The hiring freeze doesn’t apply to some executive positions considered critical to the business, U.K. branch staff and low-cost jobs, the person said.
Staley, 58, a former JPMorgan Chase & Co. investment banker, inherited a strategy from his predecessor Antony Jenkins that involved cutting 19,000 jobs across the lender by 2016, including 7,000 at the investment bank. Barclays in October cut its return on equity target, a measure of profitability, to 11 percent from 12 percent for 2016 partly because of rising restructuring charges.
Staley is joining increasing ranks of CEOs at European banks looking to shrink their workforce to help restore profit growth, hurt by tougher capital rules, cooling global growth and rising charges tied to past misconduct. At Deutsche Bank AG, co-CEO John Cryan plans to eliminate about 9,000 jobs on a net basis by 2018, or almost 10 percent of staff it expects to have at the end of this year. Standard Chartered Plc CEO Bill Winters plans to cut 15,000 jobs to help save $2.9 billion by 2018.
When he was appointed in October, Staley told staff he would “complete the necessary transformation and repositioning of the investment bank to a less capital-intensive model” and restore a “collaborative” relationship with regulators. While the securities unit, headed by Tom King, contributes about a third of the bank’s revenue, it has the lowest profitability of four units with a 2.7 percent return on equity in 2014.
Barclays fell 1.5 percent to 214.8 pence at 12:06 p.m. in London, bringing losses to about 12 percent this year. Deutsche Bank has decreased 13 percent in that period, while Standard Chartered is down 45 percent.