Barclays Shares Fall as Bank Lays Off 12,000 and Increases Bonuses for Top Staff

Shares of U.K. bank,Barclays PLC BCS, fell nearly seven percent Tuesday on word the bank posted a £329 million ($539 million) loss in the fourth quarter and was poised to cut up to 12,000 jobs this year while at the same time increasing bonuses for top staff 10 percent.

Barclays said it planned to cut its balance sheet by £105 billion ($172 billion) as it attempted to reduce costs and comply with new tough regulations in the banking industry.

In a note responding to the company’s earnings report, Ishaq Siddiqi, market strategist at ETX Capital said, "Certainly a reading that rattles confidence in CEO [Antony] Jenkins's ability to turn around the business by changing the culture, reshaping the balance sheet, and repairing the bank's reputation."

A sticking point for investors seemed to be the bonuses. Last year the company increased bonuses and incentive rewards to £2.38 billion ($3.9 billion) from £2.17 billion ($3.6 billion) the year before.

Siddiqi said, "Barclays headline earnings figures make uncomfortable reading as fourth pretax profits slid 86 percent to £191 million as operating costs soared by £1 billion during the period."

According to Barclays, the 12,000 jobs to be cut represented up to nine percent of the company’s employees worldwide. The figure included 7,000 workers in Britain and 5,000 elsewhere. The company said about half those affected in Britain had already been notified.

The average bonus paid in 2013 was £60,100 ($98,483), according to Reuters.

As was to be expected, the bump in bonuses combined with the lay-offs drew the ire of Britain’s largest labor union.

Ciaran Naidoo from Unite the Union said, "The culture change the bank promised will be less than skin deep if those at the top still hoover up obscene amounts of money while workers in call centers and branches struggle by on low wages and face the persistent pressure of job insecurity."

Barclays CEO, Antony Jenkins, defended the bonuses saying, "We need to recruit people from Singapore to San Francisco. We need the best people in the bank to drive long-term sustainable returns for our shareholders."

Jenkins has said his target return is more than 11.5 percent by 2016. Analysts are skeptical, given tighter regulations and the bank’s performance to date that reaching this goal was likely.

At the time of this writing, Jim Probasco had no position in any mentioned securities.