Barclays contemplates cutting around 2,000 jobs, predominantly in the back office
Barclays is reportedly in the process of developing a plan to save a substantial amount of money, aiming for up to £1 billion (equivalent to $1.25 billion). This initiative potentially involves cutting 2,000 jobs, mainly concentrated in the bank’s back-office operations, as shared by an inside source with direct knowledge of the situation to Reuters.
The move is part of Barclays’ broader strategy, led by Chief Executive C.S. Venkatakrishnan, commonly known as Venkat, to enhance profitability.
If the proposed plans are fully implemented, an estimated 1,500 to 2,000 jobs might be eliminated, focusing primarily on Barclays Execution Services, internally referred to as ‘BX.’
The cuts are envisioned as a key element in the bank’s overall objective to trim expenses by up to £1 billion across the organization over the course of several years.
While Barclays declined to comment on the matter, financial analysts have suggested that the potential savings of this magnitude could bring reassurance to investors.
Benjamin Toms, an analyst at RBC, noted, “Before today, the market knew roughly how much this might cost but not what the benefits are, which now becomes clearer. This will be viewed as a net positive for investors, but we now need to see more detail on how long the benefits will take to appear.”
The cost-saving target of £1 billion represents approximately 7% of Barclays’ underlying annual operating expenses, which stood at £15 billion in 2022. The ongoing discussions regarding staff adjustments within BX indicate that Barclays may consider layoffs in other areas as well.
BX, established in 2017 to consolidate support functions for the bank’s main business divisions, has witnessed a significant increase in staffing and costs over recent years. Its headcount rose to about 22,300 by the end of 2022, constituting over a quarter of Barclays’ total staff. Annual staff costs at BX have also seen an uptick, reaching £2 billion from £1.8 billion.
Chief Executive Venkat is facing pressure to enhance Barclays’ diminishing book value before an investor presentation scheduled for February, during which he plans to unveil a new strategy.
Since assuming the CEO role, Venkat has navigated challenges, including a trading blunder that incurred substantial losses. Additionally, retaining morale across Barclays’ investment bank has become a prolonged battle due to a talent exodus affecting its competitiveness against European counterparts.
As part of the bank’s broader restructuring efforts, managers within BX have been working with frozen budgets this year, being informed that costs must be reduced in 2024. Venkat had indicated in October that Barclays would undergo further restructuring in preparation for the crucial February presentation, aiming to convince shareholders of a plan to improve its valuation.
Barclays has engaged Boston Consulting Group in a strategy review, evaluating which areas of the business to invest in and which to scale down or sell. Furthermore, the bank is exploring options for its payments business, as reported in July.
