By Sinead Cruise and Lawrence White
LONDON (Reuters) - Barclays (L:BARC) Chairman John McFarlane has pledged to deliver a "clean and prosperous" 2018 to investors, putting a deadline on a vast program of restructuring and asset sales that will cause staffing numbers to fall by 50,000.
Speaking at the bank's annual general meeting (AGM) on Thursday, McFarlane thanked investors for their patience while Barclays runs down businesses it no longer sees as capable of generating appropriate returns, against a backdrop of rising regulatory costs and poor economic conditions.
Following these disposals, which include the sell-down of its 62 percent stake in Barclays Africa Group (J:BGAJ), McFarlane said the bank expected group full-time employees to reduce by around 50,000 people, resulting in a total headcount of 80,000 - almost half the staff employed at its peak.
The cost savings achieved from these cuts and the refocusing of the business would enable the bank to reintroduce a "respectable dividend level" and transform Barclays into a "significantly smaller, safer" bank, McFarlane said.
Barclays on Wednesday cheered investors with a more resilient than expected performance from its investment banking unit, amid a tough quarter for Wall Street firms.
Investors grilled Staley and McFarlane in a generally good-natured three-hour meeting over issues including executives' pay levels, their fatigue over strategy changes, and the decision to sell the bank's stake in its Africa unit.
Nonetheless, over 97 percent of shareholders who voted authorized the bank to sell down its stake in Barclays Africa to the sub-20 percent level where it can consolidate the unit's earnings into its own.
PAY COMPLAINT
McFarlane also mounted a defense of Barclays' investment banking unit, under fire from investors for its sub-par returns.
"I realize our position in investment banking raises questions, as we have a substantial position in a sector which is facing difficult times, and indeed produces a return well below what is required," he said in his first AGM address as chairman.
McFarlane said some segments of the investment bank were very successful, adding that these were offset by weaker ones that are interdependent and necessary for the success of the others.
One shareholder drew the warmest applause of the meeting for asking whether the board and senior management should not have given up more of their own pay, as the bank cut its dividend to fund the revamp.
McFarlane said he had "a lot of sympathy" with the issue of high levels of banker compensation but that Barclays was not among the highest payers in the industry and the payouts were necessary to retain top staff.
Chief Executive Jes Staley said the short-term pain was necessary to put Barclays in a position to grow payouts over time.
"Investing substantially in this company was one of the first things I did upon being appointed - and my interests are firmly aligned with yours," he said.
Staley also said the bank was working hard to relieve the pressure on returns from fines for past conduct failings and was seeking to resolve outstanding issues as swiftly as possible.
"There will also be no let-up in the critically important work to transform Barclays' culture," he said.