UK

Barclays' Antony Jenkins Announces 'Transform' Plan To Restore Faith In Barclays

12/02/2013 13:55 GMT | Updated 12/02/2013 14:59 GMT

Barclays new chief executive Antony Jenkins has pledged to transform the bank and refocus its ideals in an attempt to win back trust.

His reforms include concentrating on growing his business on just three geographical sectors - UK, US and Africa - although he noted that his re-focussing wouldn't prohibit Barclays from expanding into Europe and Asia.

The investment arm will remain "large and very important part of the group", Jenkins said, but fundamental changes would take place - including removing itself from trading 'soft' commodities, such as agriculture and crops, closing the closing our Structured Capital Markets tax avoidance business unit and reducing headcount by 1,600.

"Combined with the broader changes that we will be making across our Investment Bank to focus solely on client-related activity, this implies forgoing nearly £500m in average annual revenue. Again, we feel this is the right thing to do," Jenkins continued.

"My absolute conviction is that there is no choice between doing well financially and behaving well in this business. Our values are simple: respect, integrity, service, excellence and stewardship. These are not just words. We have defined the explicit behaviours we expect colleagues to exhibit if they are living up to these values.

"This is not window dressing or PR. They define the work we will do and the work we won't do. They define the way we hire, develop, promote and reward our people. We never want to be in a position again of rewarding people for activity that is inconsistent with our values."

The retail arm will be invested in over the next few years, with Barclays Business banking driving growth in particular, but high street branches will be hit - Jenkins expects to reduce the number of branches by 30% and headcount by 25% - or a headcount of nearly 2,000.

The response to Jenkins' speech has been broadly positive, with the bank's share price rising off the back of that and Barclays' financial statement on Monday morning.

Professor of organisational behaviour at Cass Business School Andre Spicer said the City recognised Jenkins' strategy was about rebuilding the legitimacy of the bank.

"He is trying to win back the trust of investors, regulators and the broader public. To do this he has made some significant changes including refocusing the business and punishing the investment bankers. By cutting back the investment banking division, it appears Barclays is willing to kill the golden goose which has produced a significant chunk of its profits in the past," he said.

"This move is a gamble. It will inevitably lead to lower rates of profit in the future. It is also built on a move into an already crowded sector of the market – wealth management. It comes with significant collateral damage – 1,900 people will go in retail banking.

"The strategy relies on a long and difficult process of culture change within the bank. While culture change may be sorely needed, actually delivering it will prove to be a very difficult task. To some this move might seem crazy. But this is a strategy which is less about increasing profits and more about rebuilding the tarnished image of the bank."