NEW YORK (TheStreet) -- Barclays (BCS), the much-beleaguered British bank, announced this morning that it would be shedding an additional 7,000 jobs in its investment banking division. This is after the bank announced earlier this year that it would be shedding 12,000 jobs.
The move is not surprising in light of scandals which have hit the bank in recent years. For those who need a refresher, there was the pesky LIBOR rate-fixing scandal in which Barclays (in collusion with other financial institutions) manipulated LIBOR rates upward and downward to profit on derivatives tied to the base rate, and then -- during the height of the financial crisis -- underreported LIBOR rates to lower borrowing costs and make the bank appear more stable.
Couple the rate-fixing scandal with Barclays' continued backlash for hefty executive compensation and bonus payouts during times of crisis and it is safe to say the bank is in need of a makeover.
At 3 p.m. Thursday, the Barclays ADR was at $17.73, up 7.4% for the day but down 2.2% in 2014.
WATCH: More market update videos on TheStreet TV | More videos from Keris Alison Lahiff With the layoffs, Barclays expects that the investment banking arm will make up no more than 30% of the bank's business and it will ultimately make the bank "leaner, simpler, and stronger," according to CEO Antony Jenkins. While the case for Barclays is extreme, there is reason to believe that we will see more layoffs across the investment banking industry as other banks make other exits from certain aspects of the business. Most notable was JPMorgan Chase's (JPM) recent announcement that was selling its physical commodities business. When asked about what Barclays' lay-offs could mean for Wall Street employment, Peter Laughter, CEO of Wall Street Services, a staffing firm which specializes in management consultant roles in the banking industry, offered:
"Barclays' retreat from Investment Banking is the tip of the iceberg. The competitive and regulatory pressures on investment banks will only increase. The need for new and innovative models is more important than ever."As a potential sign of hope for the industry, Laughter mentioned Moelis & Company (MC), an investment bank which thrived during the great recession by rethinking their bonus structure and organization to encourage collaboration. "Rethinking old paradigms in the key to future success," Laughter says. In the meantime, Barclays employees may want to start polishing their resumes. >>Read More: 5 Big Stories For the Rest of 2014 >>Read More: Why You Can Expect 50% Revenue Growth from Stratasys >>Read More: The Only Chart You Need to Understand the Market Right Now: StockTwits.com At the time of publication, the author held no positions in any of the stocks mentioned. Follow @carletonenglish This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.
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