Bloomberg reports that Barclays CEO Antony Jenkins’s plan to cut jobs and costs to return the lender to profit sent the stock to a two-year-high. Investors say he now has half that time to start delivering on his turnaround.
Shunning the firm’s offices in London’s Canary Wharf his predecessor Robert Diamond and his team used for presentations, Jenkins stood alone at the Royal Horticultural Halls in London’s Westminster district Monday and pledged to save $2.7bn in annual expenses in 2015, cut 3,700 jobs and reduce costs to about 55% of income from 64%. He also aims to achieve a return on equity that exceeds the lender’s 11.5% cost of equity.
To meet that target, Jenkins will dismantle part of the investment bank Diamond created, cut back the lender’s money-losing European consumer unit as well as eliminate divisions such as its tax-structuring operation that have been criticized by politicians. He needs to convince regulators that the bank has adequate capital, politicians that he will avoid missteps such as interest-rate rigging and shareholders he can return the lender to profit after a $1.62bn loss for 2012.
'He’s going to be given the benefit of the doubt to start with, but he can’t afford too many slip-ups', said Julian Chillingworth, who manages $26.5bn at Rathbone Brothers in London. 'By this time next year he’s got to show some progress'.
'The landscape for banking has fundamentally altered', Jenkins, 51, said as he committed the bank to the five values of respect, integrity, service, excellence and stewardship. 'There will be no going back to the old ways of doing things. We get it. We are changing the way we do business, we are changing the type of business we do and we are setting out a new course'.
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