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September 23, 2017

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Barclays to shrink investment bank unit, to ax 19,000 jobs

LONDON--Scandal-hit Barclays said Thursday it will shrink its investment bank unit as part of plans to ax 19,000 jobs across the entire group over the next two years.

The British lender will this year cut 14,000 positions, or one-tenth of its global workforce, more than an initial plan to remove a maximum of 12,000 jobs in 2014.

A total of 7,000 investment bank staff will lose their jobs by 2016 — more than a quarter of the division's employees.

Barclays said in a statement it will also create a "bad" bank housing assets with a combined value of 115 billion pounds (US$195 billion, 140 billion euros) that would be sold or simply allowed to run down.

As part of the group's overhaul, Barclays will incur 800 million pounds of extra costs, exit its European retail banking business and place a large focus on its Africa-wide and credit card businesses.

Chief executive Antony Jenkins has been on a mission to reduce the influence played by Barclays' investment bank unit over the entire group since replacing Bob Diamond — the much-maligned former CEO who was forced to resigned following the 2012 Libor rate-fixing scandal.

"This is a bold simplification of Barclays," Jenkins said in Thursday's statement.

"We will be a focused international bank, operating only in areas where we have capability, scale and competitive advantage."

Jenkins, the former retail head of Barclays, said the bank would become "leaner, stronger, much better balanced and well positioned to deliver lower volatility, higher returns, and growth."

Barclays Creates Non-Core 'Bad' Bank

Barclays employs about 139,000 staff worldwide, while the investment bank unit has roughly 26,000 employees.

The bank will meanwhile create Barclays Non-Core — a unit grouping "assets which do not fit the strategic objectives" of the group, the statement said.

"Barclays will look to exit or run down these assets over time," it added.

The majority of these so-called risk-weighted assets (RWAs), or about 90 billion pounds worth, are currently under the control of the investment bank unit.

Barclays will rid itself also of 16 billion pounds worth of Europe retail RWAs and 9.0 billion pounds of other risk-weighted assets.

The bank expects to incur costs on top of the 2.7-billion pounds restructuring amount it had announced 15 months ago.

Barclays' share price jumped 4.69 percent to 254.70 pence in midday trading on London's benchmark FTSE 100 index, which was showing a gain of 0.46 percent.

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