Investec hails job cuts and new cost targets at Barclays

8th May 2014 10:24

Investec has applauded Barclays' Group Strategy Update on Thursday, after the bank announced a new round of jobs cuts, mainly in its investment bank (IB), as part of its 'bold simplification'."Barclays may soon resemble the Emirates Stadium with 20 minutes left to play - there will be over 20,000 empty seats," said analyst Ian Gordon. "Barclays is already a low-risk, profitable bank, but today's 'reset' is about rightsizing the bank to reflect a smaller addressable IB revenue pool and to deliver improved/sustainable returns," he said.The bank announced that it will cuts 14,000 jobs in 2014 and in excess of 20,000 by 2016, 7,000 of which will come from IB. As such, costs in 2015 are now being guided to as £16.3bn, down from its previous £16.8bn target and compared with £18.5bn in 2013 and a targeted £17bn in 2014.Barclays also said it would create 'Barclays Non-Core', some $115bn of risk-weighted assets that will be exited or run down over time. Gordon said that this creation of a 'bad bank' is "merely packaging" though some "may welcome the strategic clarity"."What does excite us is the emboldened commitment to deliver underlying costs of £16.3bn by 2015 against reasonable revenue give-ups," he said.The broker kept a 295p target price and 'buy' rating for the stock.Shares were 5.6% higher at 256.8p by 10:33.BC