Barclays is developing plans to save up to 1 billion pounds ($1.25 billion), which may entail eliminating up to 2,000 people, mostly in the British bank's back office, according to a source with direct knowledge of the plans who spoke to Reuters.
Under the direction of Chief Executive C.S. Venkatakrishnan, also referred to as Venkat among the bank, managers at Barclays are evaluating recommendations meant to increase profitability. According to the source, if the plans are carried out in their entirety, 1,500–2,000 positions may be eliminated as part of them.
According to the source, the proposed cost reductions would mostly affect Barclays Execution Services, also referred to as "BX" internally. They would also contribute to the group's overarching goal of cutting costs by up to 1 billion pounds over a number of years.
Given that market estimates of the bank's restructuring expenses had ranged from 500 million to 1.5 billion pounds without clear indication of how that would translate into savings, analysts said the size of the possible savings may soothe investors.
"Before today the market knew roughly how much this might cost but not what the benefits are, which now becomes clearer," said Benjamin Toms, an analyst at RBC.
"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 said.
Although Barclays has cut personnel and bonuses in its retail and investment banking divisions in an attempt to cut costs, the company has not previously disclosed its plans to reduce BX or the possible savings.
BX was established in 2017 with the goal of streamlining support operations for the bank's two primary business segments, UK retail banking and worldwide. It also aimed to apply post-crisis risk management regulations and get rid of redundant work.
About 7% of the bank's core yearly operational expenses of 15 billion pounds in 2022 would be covered by Barclays' 1 billion pound cost-saving aim.
According to the insider, Barclays may choose to prioritise layoffs in other departments while continuing the BX headcount negotiations.
Both BX's expenses and workforce have increased dramatically in recent years. According to regulatory filings, its personnel increased from 20,000 at the end of 2017 to around 22,300 at the end of 2022, meaning that it currently employs over 25% of Barclays employees.
Concurrently, BX's yearly personnel expenses have increased from 1.8 billion pounds to 2 billion pounds.
Venkat is under pressure to come up with a new plan of action during an investor presentation in February, or else his book value at Barclays will continue to plummet.
The seasoned banker has had to deal with the consequences of a trading error that cost the bank hundreds of millions of dollars ever since he became CEO.
Additionally, he must fight a protracted battle to keep the investment bank at Barclays motivated, as a talent exodus is impeding efforts to compete with rivals in Europe like Deutsche Bank, BNP Paribas, and UBS.
The benchmark FTSE index fell 0.3%, while Barclays' shares rose 0.3% on Friday morning after Reuters initially reported the possible cuts late on Thursday. Barclays' shares were the only significant British bank shares to climb during the day.
Since Venkat assumed leadership on November 1, 2021, the price of Barclays' shares has decreased by 26%, while Deutsche's shares have not moved and HSBC's have increased by 37%.
According to a second person in the division who spoke to Reuters, managers across teams at BX have been operating with essentially frozen budgets this year and have been instructed to cut expenses by 2024.
In anticipation of its presentation on February 20, which is viewed as a crucial chance for the bank to persuade shareholders that it has a strategy to increase its valuation, Venkat said on October 23 that Barclays will begin additional restructuring.
In October, Venkat stated that Barclays is "evaluating material structural cost actions" following the company's dismal third-quarter results.
Boston Consulting Group and Barclays have been collaborating on a strategy assessment that aims to determine which aspects of the company should be sold or reduced and which should be invested in.
Among other things, it is evaluating options for its payments division, according to a July Reuters article.
(Source:www.reuters.com)
Under the direction of Chief Executive C.S. Venkatakrishnan, also referred to as Venkat among the bank, managers at Barclays are evaluating recommendations meant to increase profitability. According to the source, if the plans are carried out in their entirety, 1,500–2,000 positions may be eliminated as part of them.
According to the source, the proposed cost reductions would mostly affect Barclays Execution Services, also referred to as "BX" internally. They would also contribute to the group's overarching goal of cutting costs by up to 1 billion pounds over a number of years.
Given that market estimates of the bank's restructuring expenses had ranged from 500 million to 1.5 billion pounds without clear indication of how that would translate into savings, analysts said the size of the possible savings may soothe investors.
"Before today the market knew roughly how much this might cost but not what the benefits are, which now becomes clearer," said Benjamin Toms, an analyst at RBC.
"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 said.
Although Barclays has cut personnel and bonuses in its retail and investment banking divisions in an attempt to cut costs, the company has not previously disclosed its plans to reduce BX or the possible savings.
BX was established in 2017 with the goal of streamlining support operations for the bank's two primary business segments, UK retail banking and worldwide. It also aimed to apply post-crisis risk management regulations and get rid of redundant work.
About 7% of the bank's core yearly operational expenses of 15 billion pounds in 2022 would be covered by Barclays' 1 billion pound cost-saving aim.
According to the insider, Barclays may choose to prioritise layoffs in other departments while continuing the BX headcount negotiations.
Both BX's expenses and workforce have increased dramatically in recent years. According to regulatory filings, its personnel increased from 20,000 at the end of 2017 to around 22,300 at the end of 2022, meaning that it currently employs over 25% of Barclays employees.
Concurrently, BX's yearly personnel expenses have increased from 1.8 billion pounds to 2 billion pounds.
Venkat is under pressure to come up with a new plan of action during an investor presentation in February, or else his book value at Barclays will continue to plummet.
The seasoned banker has had to deal with the consequences of a trading error that cost the bank hundreds of millions of dollars ever since he became CEO.
Additionally, he must fight a protracted battle to keep the investment bank at Barclays motivated, as a talent exodus is impeding efforts to compete with rivals in Europe like Deutsche Bank, BNP Paribas, and UBS.
The benchmark FTSE index fell 0.3%, while Barclays' shares rose 0.3% on Friday morning after Reuters initially reported the possible cuts late on Thursday. Barclays' shares were the only significant British bank shares to climb during the day.
Since Venkat assumed leadership on November 1, 2021, the price of Barclays' shares has decreased by 26%, while Deutsche's shares have not moved and HSBC's have increased by 37%.
According to a second person in the division who spoke to Reuters, managers across teams at BX have been operating with essentially frozen budgets this year and have been instructed to cut expenses by 2024.
In anticipation of its presentation on February 20, which is viewed as a crucial chance for the bank to persuade shareholders that it has a strategy to increase its valuation, Venkat said on October 23 that Barclays will begin additional restructuring.
In October, Venkat stated that Barclays is "evaluating material structural cost actions" following the company's dismal third-quarter results.
Boston Consulting Group and Barclays have been collaborating on a strategy assessment that aims to determine which aspects of the company should be sold or reduced and which should be invested in.
Among other things, it is evaluating options for its payments division, according to a July Reuters article.
(Source:www.reuters.com)
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