An expected loss of 14,000 jobs at Barclays amid falling profits contrasts with improving fortunes at National Australia Bank, according to Chief Investment Officer Haig Bathgate.
The proposed cuts are higher than the 12,000 losses already mooted by the bank, and will be mainly borne in the company's investment bank, where earnings fell by almost half in the first quarter. The unit is struggling to retain its efficiency, with revenue dropping while increasing regulatory costs make the business less profitable – and more at risk of job losses. Barclays is also likely to reduce jobs in its retail bank, where it is predicted to cut the number of branches, which are costly to operate when measured against Internet banking.
An illuminating aspect of the prospective job losses at Barclays is the attitude of government to this issue, where it has been relatively mute, compared to the prospect of what will happen to AstraZeneca's 6,700 UK employees in the event of a takeover by Pfizer, where it has been much more forceful – a possible sign of creeping protectionism perhaps.
Barclays' difficulties stand in opposition to the improved performance at National Australia Bank, the owner of the Clydesdale bank and Yorkshire Bank in the UK. It reported a gain in profits as its bad debts decreased. It also is benefiting from the improved economic backdrop, reporting an improvement in its mortgage business.
Haig also discussed today's meeting of the Monetary Policy Committee of the Bank of England, which is predicted again to keep interest rates at record low levels. While there's some speculation that the UK may increase rates before the US, that's unlikely given Britain's sensitivity to borrowing costs, which is due to the preponderance of variable-rate mortgages. With Governor Mark Carney damping expectations of any increase soon, it's unlikely that rates will rise this year.
Haig, speaking on BBC Radio's Good Morning Scotland, also commented on food retailer Morrisons.
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