Jes Staley has achieved what many other investment banking CEOs dream of: he has discovered a reliable method of slashing headcount in the front office.
Barclays has been talking about vigorously cutting headcount in its investment bank since at least 2011. Talk, however, does not mean action. At the end of 2011, Barclays’ investment bank employed 23,600 people. At the end of last year, it employed 20,500: a drop of 13% in four years, which isn't exactly huge when you're supposed to be restructuring.
Step up Jes Staley. Jes joined Barclays last November and is already to be found boasting in the Financial Times about his prowess for extracting staff from the investment bank. In the four months of Staley's sovereignty, he says he's cut 6,000 people from the entity formerly known as Barclays Capital - double what his predecessors achieved in four whole years.
Staley's secret is simple: he's stopped hiring. Save the occasional big recruit from J.P. Morgan and the odd VP in real estate banking, it seems Barclays hasn't recruited anyone since Jes joined. Hiring in Barclays' investment bank is in the deep freeze, and it's having an affect. Someone might want to tell John Cryan at Deutsche Bank - he's supposed to be cutting headcount too, but Deutsche actually added staff in its investment bank in 2015.
Staley aside, the bank with the best record of cutting heads is RBS. Between 2014 and 2015, RBS cut its front office investment banking headcount from from 3,700 people to just 1,200 people. Now RBS is turning its attention to the unspecified number of infrastructure staff who support them. Bloomberg reported yesterday that RBS is eliminating 448 "trading support roles" in the UK and creating 300 new jobs in India. Goldman Sachs' banking analysts applauded this move, upping RBS's stock to buy from neutral, partly on the grounds that the associated 70% cut in risk weighted assets in the investment bank will greatly improve returns.
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