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Barclays axes 3,700 jobs after scandal-hit year

Ben Perry
A Barclays bank branch covered in scaffolding is pictured in central London on February 11, 2013. Barclays will cut at least 3,700 jobs this year and slash costs, the scandal-hit bank announced on Tuesday as it also revealed that it had plunged into an annual net loss amid the Libor rate-rigging crisis.

Britain's troubled Barclays bank will axe at least 3,700 jobs this year, it announced on Tuesday after revealing that it plunged into the red in 2012 amid the notorious Libor rate-rigging crisis.

The lender said in a statement that it would "reduce headcount by at least 3,700 across the group, including 1,800 in the Corporate & Investment Bank and 1,900 in Europe Retail and Business Banking." Barclays employs 140,000 staff.

Barclays reported a loss after tax of £1.04 billion ($1.63 billion, 1.22 billion euros) for 2012 compared with a net profit of £3.01 billion in 2011, as it took a vast £4.6-billion charge on the rising value of its own debt.

Pre-tax profits collapsed to £246 million from £5.879 billion, after it set aside £1.6 billion to cover compensation for mis-selling payment protection insurance and £850 million for clients mis-sold interest rate hedging products.

Barclays was thrown into fresh crisis in June when it was fined £290 million by British and US regulators after the group admitted attempting to rig Libor and Euribor interbank rates between 2005 and 2009.

Investors shrugged off Tuesday's weak results and sent Barclays' share price soaring after the group hiked its shareholder dividend by eight percent to 6.5 pence per share.

And despite the poor numbers, the bank revealed that its staff bonus pool stood at £1.854 billion, which was down 14 percent from the prior year.

"There is no doubt that 2012 was a difficult year for Barclays and the entire banking sector," said chief executive Antony Jenkins, who was brought in to shake up the bank in the wake of the Libor scandal that has also rocked other lenders.

"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," Jenkins added in a statement.

He ordered a strategic review after replacing Bob Diamond as chief executive last year and following the rate-rigging affair.

As well as deciding to scrap thousands of jobs, Jenkins on Tuesday said that he would slash the bank's costs by £1.7 billion in 2015.

The boss confirmed that he would shut down the bank's controversial Structured Capital Markets division, which gained notoriety for its advice to multinational companies on reducing their tax bills.

The group also revealed it has stopped trading soft commodities -- such as agricultural products -- for speculative purposes after concluding that it was not compatible with the bank's aims.

Barclays added that as a result of the job cuts, it would incur a restructuring charge of close to £500 million in the first quarter of 2013.

It added that going forward the bank would focus its investment projects in Britain, the United States and Africa, "whilst maintaining an appropriate presence across Europe and Asia."

Barclays would set out also to "provide greater disclosure and transparency" around its financial performance.

Earlier this month, Jenkins announced that he would give up his 2012 bonus, reported to have been at least £1.0 million, because of the bank's problems.

-- Fraud Office probe --


In another blow, Barclays recently revealed that Britain's Serious Fraud Office was probing payments made to Qatar Holding, which the bank tapped for funds at the height of the 2008 financial crisis to avoid part-nationalisation.

Despite its problems, Barclays' shares surged 8.57 percent to finish at 327.35 pence on London's benchmark FTSE 100 index, which closed 0.98 percent higher at 6,338.38 points.

"In all, the strategy update and results are largely in line with expectations," said Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers.

"A series of legacy issues such as Libor continue to overhang, whilst increased regulatory and capital requirements continue to reduce prospective investment returns going forward."

Libor, or London Interbank Offered Rate, is a flagship instrument used all over the world, affecting what banks, businesses and individuals pay to borrow money. Euribor is the eurozone equivalent.

State-rescued Royal Bank of Scotland last week said it would pay fines totalling $612 million to US and British regulators to settle allegations of Libor interest rate rigging -- becoming the third bank to admit its part in the affair after Barclays and Swiss lender UBS.