Barclays to Cut 7,000 Investment Bankers by 2016

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May 8 (Bloomberg) -- In today’s “Global Outlook,” Otto Dichtl, managing director at Stifel Nicolaus, discusses Barclays announcing plans to cut 7,000 investment banking jobs by 2016 on Bloomberg Television’s “The Pulse.”

Positive, and yes, it is a strong plan, especially looking at the cost issue in the investment bank and certainly the size of the run-off, less profitableable, weaker on the risk-adjusted basis.

It is basically a quarter of the bank, almost half of the investment bank in asset terms.

It is a sizable program for sure.

Why should shareholders believe this time is the right one?

By now, roughly we know all of the retirements that the p.r.a. is imposing on barclays an other u.k. banks as well.

With this plan you can see a reasonably clear path to -- that others are meeting as well.

Let's not forget that barclays was on the weak side.

Stress pests, especially on the leverage ratio was lacking.

That is a big driver behind all of those announcements and changes.

U.b.s. was heavily rated when it made this announcement.

Barclays is up 4%, 5%. it is stillwell down on the year.

Am i sboing to see the same share price spike that u.b.s. delivered?

Well, i would be surprised if it was to the same extent as u.b.s. clearly the investment banking and especially the asset-heavy low return, low margin type of investment banking with fixed income products, derivatives, etc.

Is not really in favor at the moment.

With the new regulation and requirements, the returns you can make in risk-adjusted returns are just not exciting.

Yes, it is moving in that direction a bit.

It is behind this plan that was announced.

Basically refocusing on those types, more bread and butter u.k. commercial banking, etc.

Now it is about execution wlrks it comes to fruition.

How much time do we give anthony jenkins to pull this off?

Six months?

We only have some headline figures so far.

There will be more details in the presentation that starts at 10:00. most banks already have a pretty good implementation of those runoff plans.

I would expect that barclays is able to do the same really.

There is a guy in frankfurt carefully watching this.

Deutsche bank is under lots of pressure to do something similar.

They have retrained so far from more drastic steps.

It is so important and so core.

Deutsche bank, all investment banks basically have to change the way they do business, especially on the secondary side compared to the old days.

And deutsche bank will -- do you think it is harder for -- if you have an investment banker running the business?

I don't think it is because he is an investment banker but i think it is harder.

The core of deutsche bank is the fixed income investment bank.

That is deutsche bank basically.

But it was barclays three years ago.

Barclays has more legs to stand on i think.

Barclay card is a profit machine.

They have diversified into africa a bit.

Deutsche bank, their domestic retail banking actually has never been all that profitable, really.

They have tried to strength it in recent years but the big driver of deutsche bank has always been the investment bank.

Did diamond sell the wrong side of the business?

All right.

Let's move it on.

Ott even, -- otto, thank you so much for coming in.

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