Barclays will slash nearly 4,000 jobs as part of a multi-billion pound cost-cutting transformation of Britiain's second-biggest bank, after full-year earnings tumbled amid mis-selling and rate-setting scandals.
Profit for the year came in at £246m ($384m; €287m), the bank said in a statement published on its website Tuesday, down from £5.879bn in the 2011. The bank took a £4.579bn charge against the rising value of its own debt, reversing part of a £2.078bn gain booked last year, £1.6bn to compensate customers who were mis-sold payment protection insurance and a further £850m to compensate small business owners who were mis-sold interest rate hedging products. Absent the charges, full-year profits rose 26 percent to £7.048bn, the bank said.
"There is no doubt that 2012 was a difficult year for Barclays and the entire banking sector," said CEO Antony Jenkins in the statement. "The behaviours which made headlines during the year stemmed from a period of 20 years in banking in which the sector became too aggressive, too focused on the short-term, and too disconnected from the needs of customers and clients, and wider society. "Barclays was not immune from the impact of these trends, and we suffered reputational damage in 2012 as a consequence. Change is needed both in our industry and at Barclays."
Shares surged nearly 6 percent to change hands at 319 pence each and sit at the top of the benchmark FTSE 100 and within 6 pence of a 52-week high.
Investment banking profit rose 37 percent to $4.063bn, Barclays said, while credit impairment charges for the year fell 5 percent to £3.596bn. UK retail banking and business banking profits rose 4 percent to £1.472bn while the bank's European retail unit profits fell 2 percent to £239m. Barclaycard profits for the full year were £1.506bn.
The bank also will announce, alongside its results, around 3,700 in new redundancies and £1.7bn in cost cuts. Around 1,800 of the cuts hit the corporate and investment banking division while a further 1,900 will come from the European retail and business banking unit. Barclays will detail the cuts in a presentation scheduled for 1230 London time. Around 1,600 of the investment banking job cuts have already taken place, the bank said.
"Barclays is changing," said Jenkins, who took over as CEO in August after the resignation of Bob Diamond in the wake of the bank's then-record £290m libor fixing fine.
"We intend to change what Barclays does and how we do it and have set out clear commitments against which our progress can be measured. Our plan is built on a rigorous review of 75 distinct business units to determine not only their ability to generate an appropriate and sustainable return on equity, but also their strategic attractiveness, including their impact on Barclays reputation. We expect to make good progress towards our financial commitments by 2014 and deliver them fully during 2015."
Barclays hopes to reduce the bank's overall cost base by £1.7bn to around £16.8bn by 2015, according to its strategy review, and deliver a return on equity that exceeds its anticipated equity costs of around 11.5 percent.