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Barclays to cut 30-40% of its investment bankers in Asia, predicts analyst

Barclays New York

It’s still several weeks until February 12th, the day when Barclays’ big strategy will be announced, but speculation about its redundancy programme is mounting. The latest reports suggest 2,000 jobs will go from the investment bank. It’s starting to look like Barclays’ Asian bankers will be by far the hardest hit.

“It’s my expectation that Barclays will let go of 30-40% of their investment banking staff in Asia,” said Ian Gordon, UK banking analyst at Investec. “On February 12th, I am expecting Barclays to release a detailed breakdown of their franchise in different markets, showing that their product lines in Asia are only marginally profitable, if at all. By comparison, the scale and efficiency of Barclays’ operations in London and New York will merit their continuation.”

Barclays isn’t commenting on the alleged layoffs. Nor does it break out headcount by region. The Financial Times today says that 9,000 of Barclays’ 23,000 jobs are based in London and that only ‘several hundred’ will be lost in the coming cuts, suggesting London will escape any restructuring fairly lightly. Gordon puts Barclay’s US headcount in the region of 7,000. In 2010, headcount in Asia was 3,000 people according to the Financial Times, but it’s likely to have increased following a bid to increase Asian headcount. In April 2010, Dixit Joshi, then head of equities for BarCap across EMEA, said the bank was investing in staff with the aim of becoming a top three player in five years in ECM (equity capital markets), corporate broking, prime services and equities.

Dixit Joshi left Barclays for Deutsche Bank in July 2010 and his dream was never realised. In 2012, Barclays ranked 18th for Asian ECM according to Thomson Financial.  This was an improvement on 2011, when it ranked 33rd, but it’s a long way from 3rd.

Gordon isn’t the first banking analyst to suggest Barclays makes big layoffs in Asia. In December, analysts at Goldman Sachs also suggested that cutting the Asian equities, M&A and capital markets businesses would be a good idea. “The expectation in the market is that you will the greater percentage of cuts where the hiring and expansion at Barclays happened last,” said James Chappell, UK banking analyst at Berenberg. “- That means Asia and Latin America.” Accordingly, Bloomberg reports today that Barclays is making big cuts to its Brazilian equities business.

Gordon predicts that the UK and the US will each experience only a few hundred redundancies in the coming round. That could leave Asia shouldering most of the burden, with business entire lines being dropped. In September 2012 the Financial Times reported that Barclays employed 400 equities staff and 250 advisory bankers in the region. Cuts are also likely to hit back office jobs in Asia, predicts Chappell. Since 2008, recruiters say Barclays has shifted operational and product control roles to Singapore and Mumbai. Some of these now look at risk.

Ralph Silva, an analyst at Silva Research, says 2013 is the year that all banks will start to seriously consider their headcount in Asia. “Since 2008, the vast majority of banking layoffs have been outside Asia because the Asian economy was fairly promising and banks wanted to keep their headcount there. However, the West is expected to grow in the next couple of years and Asia isn’t. Banks have cut as much as they can in the West and Asia is now the obvious place to take out costs.”

Separately, recruiters point out that the timing of Barclays’ redundancies seems to augur very badly for its bonuses, which are announced around the 8th February.

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