- Headcount reduced more in 4 months than past 4 years, CEO says
- Staley says he `can't sleep at night' due to stock valuation
Jes Staley said he’s eliminated more than 6,000 positions in his first 100 days in charge of Barclays Plc, after the new chief executive officer shrank the investment bank and exited countries from Brazil to the Philippines.
“We’ve now reduced the headcount by well-north of 6,000 people, so double what was done in the last four years in the first four months,” Staley, 59, said Tuesday at the Morgan Stanley Financials Conference in London. “On the day that I arrived at Barclays, we imposed a headcount freeze.”
Staley has moved to simplify Barclays after inheriting a bank that’s seen about 20 billion pounds ($28 billion) of profit in the past five years wiped out by misconduct charges. The CEO announced plans to step back from a century of operations in Africa, closed offices in seven countries in Asia, and pledged to sell-down the bank’s non-core assets faster.
The efforts haven’t boosted the stock. The shares have fallen 30 percent since Dec. 1 and trade at about 50 percent less than its book value, driven in part by Staley’s decision to slash the dividend in half for the next two years.
“Any management of a bank that is trading below its book value can’t sleep at night,” Staley said. “You, our shareholders, are saying that with the stock price at the current level, we are destroying value. So what Barclays has to be dedicated to is to produce the financial results that generate the confidence from the shareholder base.”
Once Barclays’s 62 percent stake in its African banking division has been sold down to less than 20 percent -- deconsolidating the unit from the bank’s balance sheet and freeing it from punitive capital requirements -- headcount will be reduce by another 44,000, Staley said. The company had 129,400 full-time equivalent employees at the end of 2015, down from 139,600 in 2013. That figure may not include contractors or some other workers.
Although returns at the investment bank are “not acceptable,’’ Staley said the business is “lean” and to cut risk-weighted assets at the division further would “threaten its ability to play in the top tier.” The unit’s return on equity was 5.6 percent in 2015 and was negative in the fourth quarter.
Since joining, Staley has hired several executives from his former employer JPMorgan Chase & Co. for his management team, including C.S. “Venkat” Venkatakrishnan as chief risk officer and Paul Compton as chief operating officer.
“One of the reasons we announced and recruited Paul Compton is that we need to very much focus on the core operations and technology expense at Barclays in our investment bank,” the CEO said Tuesday. “That will be one of the key instruments of getting the returns at the investment bank closer to the cost of capital.”