Barclays Plc needs to cut about 7,500 jobs in its investment bank,or almost 30 percent of its staff, to get its profitability back above itstarget as tougher regulations squeeze income, analysts at Bernstein say.
Barclays is due to release details of a review of its investment bank on May8, which is expected to see thousands of jobs go to cut costs.
Cuts are mainly needed in the European fixed income, currencies andcommodities (FICC) business, which is probably loss-making and takes up 60percent of the investment bank's capital, Bernstein analyst Chirantan Barua saysin a note on Wednesday.
"That's where a fundamental shake-up is required...we expect 6,500 to 7,500FTEs (full-time equivalent jobs) to go, with more than 5,000 in the EuropeanFICC business," Barua says. That would save about 1 billion pounds in annualcosts, reduce compensation to about 33 percent of income by 2016, and should seethe business deliver a return on equity of 10-12 percent, he estimates.
Barua says new regulations have destroyed 20-30 percent of income in FICC,which is likely to cut Barclays' annual income in that area to 4.5-5.5 billionpounds over the next three years, down from an average of 7.8 billion from2009-12.
Some investors have said they want to see Barclays take aggressive action tocut costs in the investment bank. The bank's shares are up 0.3 percent at 248.1pence by 0740 GMT, outperforming a 0.2 percent fall in the STOXX Europe 600 banksector.
Reuters messaging rm://steve.slater.thomsonreuters.com@reuters.net (Reporting by Steve Slater)
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