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Barclays cuts jobs as profits drop 33%

The boss of banking giant Barclays said that staff levels could be cut by around 3,000 this year as job losses in the industry continue to mount.

Barclays, which has 56,900 staff in the UK, has reduced its headcount by 1,400 so far this year across the group and this trend will continue and increase, chief executive Bob Diamond said.

The warning came as Barclays reported a 33% drop in profits to £2.6bn after it took a £1bn hit to cover compensation for customers who were mis-sold payment protection insurance (PPI).

But the group's underlying performance - stripping out the PPI provision - revealed profit growth and the bank is on target to meet its business lending targets under the Project Merlin agreement with the Government.

Barclays cost-cutting plans follow in the footsteps of HSBC, which yesterday announced plans to axe 30,000 staff, and Lloyds Banking Group, which in June unveiled plans to shed 15,000 jobs.

Mr Diamond said the cost-cutting programme was necessary for the bank to meet its target of increasing returns for shareholders - but would not give specific targets for headcount reduction.

He said: "In the first half of the year net headcount was down about 1,400.

"We should assume that trend will continue and increase. We're not giving specific targets."

Mr Diamond agreed a net reduction of 3,000 for the full year was possible.

He said proposals to ring-fence retail and investment banking operations would hurt the UK economy and, in a worst-case scenario, could lead to further job cuts at Barclays.

The Independent Committee on Banking, which releases its full report next month, has already indicated its preference for a ring fence around the UK banks' retail and investment banking operations, a move expected to push up costs in the UK.

But Mr Diamond said the bank was optimistic and added: "It's not in the interest of the commission to do anything radical, it's not in the interest of the UK."

Barclays, like HSBC, revealed a better-than-expected performance. The City had been expecting £2.4bn in reported profits.

Stripping out the PPI provision, Barclays would have seen profits increase 24% to £3.7bn in the period.

Barclays said it extended £20bn in lending to businesses in the first six months, in line with its £40bn target for the full year.


The amount paid by Barclays to compensate customers who were mis-sold PPI