Barclays is working on plans to save up to 1 billion pounds ($1.25 billion), which could involve cutting as many as 2,000 jobs, mainly in the British bank’s back office, a person with direct knowledge of the proposals told Reuters. Managers at the lender, led by Chief Executive C.S. Venkatakrishnan, known within the bank as Venkat, are reviewing proposals to boost profitability. The cuts would primarily affect Barclays Execution Services, the six-year-old business that brought support functions together into one unit, referred to internally as ‘BX.’
If the proposals are implemented, the reduction in staff would be 7% of BX’s underlying annual expenses of about 15 billion pounds. The potential cuts would come as the bank struggles with falling investment banking fees and faces a slowdown in global trade.
The potential cost-saving plan, expected to be presented in February, may include a decrease in some parts of Asia, particularly its equities franchise, and the wind-down of retail and commercial banking in parts of Europe. However, the lender is expected to retain its investment banking presence in London. Barclays’ investment-banking revenues have struggled in recent years as regulatory changes and an ongoing slump in trading activity have reshaped the industry. In contrast, rivals on Wall Street have cut costs, primarily by trimming salaries and reinstating performance ratings that could lead to the firing of underperforming traders.
Investors will be looking to see if the new management team can boost Barclays’ falling book value, which is currently at a multi-year low after a series of missteps that culminated in the departure of then-CEO Jes Staley last year. The veteran banker took over at Barclays in November 2021 but faced a long battle to maintain morale at the investment banking arm, where a talent exodus has hindered efforts to compete with European rivals such as Deutsche Bank (DB.DE) and HSBC (HSBA.L).
Barclays’ share price rose slightly on Friday after Reuters reported the potential job cuts, although it remained the only central UK bank to fall in the FTSE 100. Investors were likely relieved by the scale of the savings, as market forecasts for restructuring had ranged from 500 million pounds to 1.5 billion pounds without much sense of where that might be found in the company. Struggling Swiss lender Credit Suisse aims to slash thousands of jobs to improve its finances. It has already cut around 9,000 jobs since January. The potential job cuts at Barclays will be the largest for a British lender this year. Credit Suisse is set to unveil its full-year results on Thursday, with analysts expecting it to report a loss of at least 1.4 billion Swiss francs. The bank has a market capitalization of around 50 billion euros ($57 billion) and is listed on the London Stock Exchange. A group of private equity funds and other institutional investors owns the firm.
