It’s hard out there for investment bankers.
Barclays, the bank that bought Lehman Brothers in 2008, said Thursday it is cutting 19,000 jobs worldwide — and will create a separate “bad bank” to hold and spin off its riskier assets.
More than one-third of the job cuts, or roughly 7,000 positions, are in investment banking — the very business that Lehman made its name in.
The cuts — alongside similar moves by JPMorgan, UBS and other banks — mean there are far fewer places for financiers in securities trading and mergers and acquisition to land.
“We will be a focused international bank, operating in areas where we have capability, scale and competitive advantage,” Barclays Chief Executive Officer Antony Jenkins said in a statement.
Investment banking, which includes underwriting securities and advising on M&A deals, has been a rough business lately. Lower interest rates and volatility have made investors less willing to buy what banks are selling.
Investors reacted positively to the announcement, with Barclays’ stock rising 7.4 percent, to $17.73 a share.
The spin-off bank, called Barclays Non-Core and run by Eric Bommensath, the co-chief executive of corporate and investment banking, will house about $200 billion of riskier assets — such as derivatives and securities made up of emerging market assets.
Bommensath’s job is to sell much of that off, just as Barclays had to do with Lehman’s assets.
The move is a step down for Bommensath, who was once a rising star at Barclays, said a former Barclays banker.
For soon-to-be ex-Barclays bankers, there are few places outside the so-called bad bank to go.
Some are fleeing to private equity firms, hedge funds and even a number of the companies that they advised, said one IB headhunter. Other M&A advisers are starting up their own boutique firms to leverage their Rolodex on deals, he said.
Or maybe they can drift on a golden parachute for a while.