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Does BarCap need to sever a lot more staff?

On one hand, it’s a great achievement that average income per head at BarCap was in positive territory at all for 2008. On the other, Barclays’ annual results, which were published yesterday, show that income per head at BarCap plummeted to 150k last year, down from 410k in 2007.

Over the same period, BarCap’s compensation costs as a percentage of net income soared. In 2007 they were 47%; last year they were 82%.

Does BarCap need to detach more staff to bring its costs into line? A total of 3,100 people were trimmed from Lehman’s North American business in the fourth quarter last year, leaving a net addition of 6,900 people, but cuts elsewhere have been relatively modest. According to the annual report, 2008 headcount at legacy BarCap was –

…materially unchanged except for hiring associated with the annual global graduate programme.

There have been some redundancies. In January, 1,300 BarCap job cuts were announced. And the bank trimmed 100 investment bankers in June 2008.

Plummeting income and the soaring comp ratio suggest there’s room for more cuts.

Promisingly, however, BarCap is echoing everywhere else in the assertion that 2009 has begun exceptionally well. BarCap staff need to hope this continues.

Comments (8)

  1. Sarah, has Henry posted his column yet? Is it being published here? thanks

  2. Henry’s column has not yet materialised. We live in hope.

    Sarah, Editor, eFinancialCareers Reply
  3. Nice article, Sarah.

    One remark that is maybe missing is the following: could it be that BarCap is doing – gasp – the right thing by its people and biting the bullet of lower income ratio so that, when the markets pick up, they still have staff?

    All the banks have been behaving towards their staff like they do towards toxic-assets, commodities to be dumped at will. While I am not holding my breath that BarCap will be any different, maybe we can cling on to the thought for a little while.

    As for Henry: I can imagine he’s just scared witless at the thought of being on the receiving end, for a change.

    Rodolphe Mortreuil, MKMC Reply
  4. The joke is getting a bit stale ..most of us now know the identity of Henry..and he is as awful as you can imagine….As most of you guessed he sits in a “Trading Arcade” most of the day gambling his own money and paying well over the odds to the “House” for doing his admin. He calls himself a Prop Trader.
    He lives at home as he was not employed long enough (at the fairly respected but now sadly defunct Bank where he got himself a role as a Trading Assistant) to have made enough to continue with the rent on his “Just about” Docklands flat. The Porsche is still around but the next service is gonna kill him and its still 2 years before its paid off, he could really do with selling it but the price would not cover the outstanding debt. There are a few old girlfriends who still see him, but a lot of that is sympathy..1 surprisingly pretty one still knows him as a “Trader” he hasnt got the nerve to tell her.
    Do you know having described Henry ..I am slightly worried that i might have the wrong person..as there are hundreds who could fit the same profile !

  5. There goes eFC again, taking shots at Barcap. Its not good enough that they only sacked 1300 staff. Ran out of other banks to write about. The sooner they sack more staff the happier eFC will be..

  6. I was bullied out of my job at BarCap due to a jealous VP.
    Hopefully justice will shine a light and he will get the chop.

  7. That was coming. They offshore IT to Asia. But hired at least 2 managers to manage 1 techi

  8. Barcap is not good.

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