BP shares fall £4 billlion after boss does a Ratner and calls his company 'dreadful'

Almost £4billion was wiped from BP's value yesterday after its new boss admitted its current performance is "dreadful".

Tony Hayward's scathing comments were made to workers in Houston, Texas, where he spoke of the need to cut management jobs at the oil group in favour of front-line exploration and refining positions.

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The gaffe was immediately compared with High Street jewellery chain boss Gerald Ratner, who in 1991 described one of his products as 'total crap' and sent his firm's fortunes plunging.

An internal memo revealed that Mr Hayward, who took over as chief executive only in May, also believes BP's corporate structure is too complicated.

BP is next month expected to reveal plans to cut the number of layers from the workforce up to the chief executive from 11 to about seven. BP insisted Mr Hayward meant exploration and production, rather than firm's finances, were dreadful.

"Tony wasn't talking about financial figures, he was talking about operational performance," said a spokesman. "We can confirm there will be changes to the structure."

At a briefing in July, when BP revealed a fall in second-quarter profits to £3 billion, Hayward said: "BP's current operational performance is not good enough."

Analysts were bracing for bad news from BP's third-quarter update, but the phrase 'dreadful' has spooked investors, spreading fears that the update, due at the end of October, will be worse than expected.

Investment bank Citigroup said: "The tone of the comments, and the need to impose major organisational changes, may raise investor concerns that the recovery in BP's fortunes will take longer than the market is currently discounting."

Shares closed down 17p at 572 1/2p.