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A branch of Barclays bank is seen in Boroughbridge, northern England.NIGEL RODDIS/Reuters

Barclays will cut about 3,000 jobs this year as the industry grapples with tougher regulation and the impact of a spreading sovereign debt crisis on investment banking operations.

First half profits at the bank fell by a third after a drop in bond trading activity at its investment bank and a charge to compensate customers who were mis-sold insurance undermined a big improvement in bad debt charges.

Weakness at Barclays Capital had continued into July, the bank said on Tuesday.

Group pretax profit for the six months to the end of June was £2.64-billion ($4.3-billion U.S.), down 33 per cent from a year ago but above the average forecast of £2.4-billion among analysts polled by the company.

Barclays Capital's half-year profit fell 9 per cent on the year and revenue at the investment banking arm was down 11 per cent to £6.26-billion, led by a fall in fixed income revenue.

That drop was less steep than at most rivals, however, after revenue across the industry slumped in the second quarter due to the euro zone debt crisis. BarCap's income in the second quarter was down 14 per cent from the previous quarter and first-half revenue from fixed income, currencies and commodities (FICC) was down 20 per cent from a year ago.

Shares in Barclays were up 0.5 per cent at 218 pence by 0730 GMT, outperforming a 0.5 per cent weaker FTSE 100 index.

New chief executive officer Bob Diamond, the American who built BarCap into a debt market powerhouse over the previous decade, told reporters the bank had already cut 1,400 jobs during the first half and that the tally was likely to rise to about 3,000 by the end of the year.

"You should assume this trend to continue and increase somewhat," Mr. Diamond said during a conference call. Barclays joins a growing line of banks, including HSBC, Goldman Sachs, Credit Suisse and UBS to announce jobs cuts in recent weeks.

Diamond is aiming to cut £1-billion of annual costs and reckons he can generate more than £6-billion per year of extra revenue by 2013 under a revamp plan.

"We have made good progress in the first half delivering against these in a difficult operating environment," Mr. Diamond said in a statement accompanying the company's first-half results.

Earnings were helped by a 41-per-cent tumble in bad debt charges during the first-half to £1.8-billion.

But Barclays took a £1-billion charge to cover compensation for the mis-selling of insurance policies in Britain, which had been signalled previously.

Its underlying profit was £3.7-billion, up 24 per cent on a year ago.

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Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/03/24 4:10pm EDT.

SymbolName% changeLast
BCS-N
Barclays Plc ADR
+0.32%9.45
GS-N
Goldman Sachs Group
+0.59%417.69

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