LONDON, Jan 21 (IFR) - Barclays is to exit cash equities in Asia and cut about 1,000 investment bank staff as its new chief executive Jes Staley tries to improve profitability in the business by slashing costs, a person familiar with the matter said.
The cuts were announced to staff on Thursday, and most will be in Asia, the person said. Barclays has already cut about 7,000 staff in its investment bank in the last three years, reducing the unit’s headcount to about 17,000.
Tom King, head of investment banking for Barclays, said the bank was “sharpening our focus on the geographies and products where we have a clear competitive advantage” in a memo to staff, seen by IFR.
Barclays is increasingly focusing its investment bank on its two “home” markets of Britain and the US, notably the financial centres of London and New York.
Its retreat echoes cutbacks at several European rivals, including Deutsche Bank and Royal Bank of Scotland, and follows a long struggle for many to make profits in Asia.
It also reflects difficult market conditions for investment banks as tougher regulations hurt profitability.
Indeed, Deutsche Bank said late on Wednesday it would make a loss of 6.7bn in 2015, partly due to difficult trading conditions and restructuring charges. Its shares slumped 7 percent in early trading on Thursday.
Barclays shares were up 0.6 percent. Its latest move continues the British bank’s retreat from Asia, where it will keep a physical presence only in China, Hong Kong, India, Japan and Singapore.
That will see it exit Australia, Taiwan and South Korea. It had previously had a presence in 12 Asian countries, including Indonesia, Malaysia, Thailand and Philippines.
It will discontinue Asia-Pacific cash equity products, with the exception of electronic execution-only services, and no longer pursue “high-touch’”equities sales, trading, or research coverage of Asia products in any region, King’s memo said.
Among the people leaving will be Jon Pratt, chairman of global finance for Asia-Pacific, and Guy Smith, co-head of its Asia debt origination group.
The bank will cut a majority of its DCM staff in Singapore and Australia, but will retain a handful of bankers, people familiar with the matter said. Avinash Thakur, who was co-head of Asian debt origination alongside Smith, will become sole DCM head.
King’s memo did not specify the number of job cuts and Barclays declined to comment on specific departures.
King said the bank was considering exiting its precious metals business and will close its Moscow office, with coverage of key Russian corporates and financial institutions moving to London.
It will stop sales and local research coverage of the Central and Eastern Europe, Middle East and North Africa region cash equity products and centralise coverage in London.
Its Brazil markets business will be delivered offshore by its New York and London teams.
In the Americas, the bank will focus its securitised products on origination-led asset-backed and commercial mortgage-backed securities.
As a result, Barclays will no longer offer residential loan trading, GNMA CMBS or CMO products.
Citigroup has also cut a number of capital markets bankers in a move to shave about 20 positions from its institutional client group in Asia Pacific, people familiar with the matter told IFR on Thursday
Departures include Vivian Sam, a director in the leveraged finance business, as well as Andy Siow, a member of the debt syndicate team in Hong Kong. At least two associates covering equity capital markets are also leaving, the people said. (Reporting by Steve Slater in London and Frances Yoon in Hong Kong; editing by Sudip Roy and Ian Edmondson)