Barclays is considering a strategy to save up to £1 billion ($1.25 billion), which may include the elimination of as many as 2,000 employees, most of whom work in the bank's back office in the United Kingdom.
Proposals to increase profits are being discussed by Barclays' management, headed by Chief Executive C.S. Venkatakrishnan, a source close to the situation has told Reuters. The individual claimed that if all of the plans were carried out, 1,500 to 2,000 jobs would be lost.
New Strategy
As part of a larger plan to reduce expenditures by up to £1 billion across the firm over many years, the source said the prospective cutbacks would mostly affect Barclays Execution Services (or "BX").
Experts say the size of the possible savings would calm investors after the market predicted the bank would incur restructuring charges of between £500 million ($628 million) and £1.5 billion ($1.9 billion) without providing any insight into how that would convert into savings, the Guardian reported.
RBC analyst Benjamin Toms said that although the market had a general idea of how much this may cost in the past, it now has a better grasp on the potential advantages. "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," he added.
As Venkatakrishnan prepares to disclose a new strategy to investors during a presentation in February 2024, he is under intense pressure to find methods to increase Barclays' plummeting book value. The seasoned banker has been dealing with the aftermath of a trading mistake that lost the bank hundreds of millions of dollars ever since he took over as CEO.
Most Affected Division
Barclays has taken steps in recent years to decrease costs by cutting bonuses and positions in its retail and investment banking divisions, but the company's attempts to diminish BX and the potential savings have not been previously revealed.
BX was established in 2017 with the intention of streamlining the bank's support operations for its two primary lines of business (UK retail banking and overseas).
Barclays' cost-cutting goal of £1 billion would be equivalent to around 7% of the bank's core annual operating expenditures of £15 billion ($19 billion) in 2022.
Meanwhile, The insider also noted that Barclays may opt to prioritize layoffs in other areas while the BX headcount negotiations continue.
Both BX's payroll and overall expenses have skyrocketed in recent years. According to regulatory filings, its workforce increased from 20,000 at the end of 2017 to around 22,300 by the end of 2022. This represents more than a quarter of Barclays' total workforce.
BX's yearly personnel expenses have also increased, from £1.8 billion ($2.2 billion) to £2 billion ($2.5 billion).
