Barclays to cut 750 jobs in deal with Legal & General

Barclays will sell Legal & General products in a deal which it predicts will at least double the bank's sales of financial products within four years to over £100m in annual premium income, and more than double fund sales to £2bn a year.

In return, Legal & General will pay Barclays a distribution commission, an arrangement which it says will become a model for the rest of the industry.

John Stewart, chief executive of Barclays Retail Financial Services, says: "It addresses a strategic priority by accelerating - without the need for an acquisition - the development of our long-term savings and investment offering, an area of increasing importance to our customers."

From the second half of the year, Barclays Life, Barclays Funds and b2 will not recruit new customers and the unit trust business will be transferred to Legal & General.

The jobs will be lost in London and the South-East of England. The bank says it has worked with the banking union UNIFI to minimise the impact on its staff.

The rationale for the move comes in Barclays estimate of costs. It believes that up to £40m pre-tax will be incurred by the end of 2002, but these costs will be more than made up for by a one-off contribution to income in 2001 of £60m pre-tax derived from an increase in the embedded value of the life fund.

Barclays' pre-tax costs will be reduced by £70m a year from the end of 2002, of which £35m will be accounted for through the life fund.