LONDON - Barclays announced on Tuesday that it would cut 3,700 jobs and close several business units, as the British bank reported a loss in the fourth quarter of last year.
The major restructuring of Barclays’ operations follows a series of scandals at the bank, including the manipulation of key benchmark interest rates, which led to the resignation of the firm’s former chief executive, Robert E. Diamond Jr.
In a bid to reduce its exposure to risky trading activity, the bank, based in London, said it would reduce its work force by around 8 percent, or 1,800 jobs, in its investment banking division this year, though it already had cut 1,600 from this unit.
A further 1,900 will be cut from Barclays’ European retail and business banking unit.
The cuts have been focused in areas where Barclays does not compete globally with other international banks like European and Asian equities markets, as well as in business units like tax planning that have been criticized for tarnishing he firm’s reputation.
“Barclays is changing,†the bank’s chief executive, Antony P. Jenkins,said in a statement. “We intend to change what Barclays does and how we do it.â€
The British bank generated a net loss of £610 million, or $950 million, in the last three months of 2012, compared to a profit of £602 million in the similar period in 2011. The quarterly earnings were hampered by additional provisions set aside to compensate costumers who were inappropriately sold insurance and for small businesses that were improperly sold complex interest-rate hedging products. Barclays also took a charge against the value of its own debt.
Without the adjustments, Barclays’ pretax profit for the fourth quarter was £1.1 billion, almost double the earnings in the similar period the previous year.
As part of the restructuring plan, Mr. Jenkins, who previously ran the firm’s consumer banking business, said Barclays had conducted a review of 75 of its business units, based o! n their profitability and impact on the firm’s reputation.
The British bank added that it would reduce costs by around 10 percent, to £16.8 billion by 2015.
Despite widespread criticism of Barclays’ risky trading activity related to the Libor rate-rigging scandal, the bank will retain the lion’s share of its investment banking unit, particularly in Britain and the United States.
Barclays said that it had cut bonuses across its operations for 2012 by 16 percent compared to the previous year. In its investment banking division, total bonuses fell 20 percent with the average bonus in the unit standing at £54,100, a 17 percent reduction over the previous year, according to a company statement.
The British bank said it had cut compensation awards because of risks facing several business units, including the rate-rigging scandal.
In a settlement with U.S. and British authorities in June, Barclays agreed to pay a $450 million fine after some of its traders manipulated the Londn interbank offered rate, or Libor, for financial gain. Some of the firm’s managers also altered the rate to portray the British bank in a more healthier financial position than it actually was.
The investment banking division generated a pretax profit of £858 million in the fourth quarter of last year, compared to £267 million over the similar period in 2011. Pretax profit at Barclays’ retail and business banking unit over the period rose 17 percent, to £732 million, while its corporate banking division’s pretax income almost tripled, to £107 million.
Mr. Jenkins, who will outline Barclays’ restructuring plan to analysts early on Tuesday, is expected to acknowledge that some of the firm’s past actions had fallen short, and that the bank was trying to change its culture after widespread public anger caused by the wrongdoing.
“We get it,†the Barclays chief will say, according to excerpts of his speech released to the media. “The old ways weren’t the right way t! o behave ! nor did they deliver the right results - for banks themselves or for wider society.â€
