Barclays to slash several hundred employees following sharp fall in market activity..

Barclays Capital, the investment banking arm of Barclays, is planning to cut up to several hundred employees following a sharp fall in market activity in the second quarter.

Sources close to the bank say that the job losses, which could be announced as early as Wednesday, will be spread across back office and administrative functions that support BarCap businesses such as sales and trading.

News of the cuts is likely to alarm the City as well as Wall Street, where BarCap has a sizeable presence following its acquisition of the US operations of Lehman Brothers at the height of the financial crisis.

It is also likely to raise questions about BarCap’s aggressive expansion in recent years under the leadership of Bob Diamond.

The investment bank generated more than 80 per cent of Barclays’ pre-tax profits in the first half of the year, in spite of a slowdown in activity amid volatile markets and fears of a sovereign debt crisis in Europe.

In the second quarter, fixed income, currencies and commodities trading revenues were down 16 per cent from the first quarter, while BarCap’s advisory revenues were down 17 per cent.

Without clear signs of a pick-up in client activity, several analysts have flagged concerns about BarCap’s escalating cost base.

BarCap has added almost 4,000 staff since last June – bringing its total headcount to 25,500 – in its drive to join the ranks of the world’s leading investment banks.

That growth, however, has come at a price, with first-half salary and bonus costs across the Barclays group running at nearly £5bn, £1bn higher than the same period in 2009. Most of that growth is attributable to BarCap.

BarCap sources say that, in spite of the cuts, the bank still plans to finish 2010 with a higher headcount than at the end of 2009.

Many of the staff hired over the past year have come as part of the build out of BarCap’s equities and advisory businesses in Europe and Asia.

Mr Diamond insisted that the bank’s expansion was going “exactly” to plan when questioned about his unit’s increased costs at Barclays’ half-year results presentation last week.

Headhunters that specialise in financial services have warned that unless there is a substantial pick-up in corporate activity in the coming weeks, many more banks will be looking to trim costs by cutting staff.

http://www.ft.com/cms/s/0/05b4ac82-a4be-11df-8c9f-00144feabdc0.html

Green shoots...

 

Wonder where these 20 somethings are headed now that they will be losing out on those big wallstreet dollars, I'm sure a $40k a year job is not worth their time or energy.