Barclays Works on $1.25 Billion Cost Plan, Contemplating Job Cuts Amidst Profitability Review
Barclays, one of the largest British banks, is reportedly developing a cost-saving strategy that could potentially save the company up to 1 billion pounds ($1.25 billion). These savings might involve slashing as many as 2,000 jobs, primarily in the bank’s back-office operations, according to a source familiar with the plans.
The proposals are currently under review by Barclays’ management team, led by Chief Executive CS Venkatakrishnan, also known as Venkat, with the intention to enhance the bank’s profitability. If fully implemented, this could lead to the reduction of 1,500 to 2,000 positions. When approached for comment, a Barclays spokesperson declined.
The majority of the potential job cuts would take place at Barclays Execution Services, internally referred to as ‘BX’. These cuts would contribute to an overarching target of cutting expenses by up to 1 billion pounds across the entire organization over the span of several years, the source added.
In recent years, Barclays has made endeavors to reduce expenses by scaling back bonuses and eliminating jobs in their retail and investment banking sectors. However, the downsizing of BX and its potential cost savings have not been previously disclosed.
Established in 2017 to consolidate support functions for Barclays’ key business divisions, namely UK retail banking and international operations, BX’s purpose was to eliminate redundancy and adhere to post-crisis risk management regulations.
If successful, Barclays’ 1 billion pound cost-saving objective would represent approximately 7 percent of the bank’s underlying annual operating expenses of 15 billion pounds projected for 2022.
The discussions regarding BX’s headcount are still ongoing, and it is possible that Barclays might prioritize job cuts in other areas, according to the source.
BX’s staff numbers and costs have experienced substantial growth in recent years. Filings with regulators indicate that its headcount reached around 22,300 by the end of 2022, compared to 20,000 at the end of 2017. Moreover, BX now accounts for over a quarter of all Barclays employees. Annual staff costs at BX have risen to 2 billion pounds, up from 1.8 billion pounds.
Venkat finds himself under pressure to find solutions to boost Barclays’ declining book value ahead of an important investor presentation scheduled for February, where he will unveil a new strategy.
Since assuming the position of CEO, Venkat has grappled with the consequences of a trading error that cost the bank hundreds of millions of dollars. Additionally, he faces the challenge of maintaining morale within Barclays’ investment bank, which has been hindered by a talent exodus, impeding efforts to compete with European rivals such as Deutsche Bank, BNP Paribas, and UBS.
During this year, BX managers have been working with budget constraints and have been informed that costs must be reduced in 2024, according to another source within the division.
On October 23, Venkat hinted that Barclays would undergo further restructuring in preparation for the February 20 presentation, regarded as a crucial opportunity for the bank to convince shareholders that it has a plan to improve its valuation.
Barclays has enlisted the help of Boston Consulting Group for a strategy review, focusing on which areas of the business should be invested in and which should be downsized or divested.
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