LONDON: Barclays is working on plans to save as much as 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 Barclays, led by Chief Executive C.S. Venkatakrishnan who is known within the bank as Venkat, are reviewing proposals to bolster its profitability. As part of these 1,500 to 2,000 jobs could be cut if implemented in full, the person said.
A spokesperson for Barclays declined to comment on Thursday.
The potential cuts would primarily be at Barclays Execution Services, known internally as ‘BX’, and would form part of an overall target of reducing expenses by up to 1 billion pounds across the group over several years, the person added.
Barclays has made efforts to reduce expenses in recent years by slashing bonuses, as well as jobs in its retail and investment banking businesses, but moves to shrink BX and the potential savings have not been reported before.
Created in 2017 to consolidate support functions for the bank’s two main business divisions, UK retail banking and international, BX was designed to eliminate duplication and implement post-crisis risk management rules.
Barclays’ 1 billion pound cost saving target would represent about 7% of the bank’s underlying annual operating expenses of 15 billion pounds in 2022.
The BX headcount discussions are ongoing and Barclays could decided to prioritise layoffs in other areas, the source said.
BX’s staffing and costs have grown significantly in recent years. Its headcount rose to about 22,300 as of the end of 2022, from 20,000 at end-2017, and now accounts for more than a quarter of Barclays staff, regulatory filings show.
Meanwhile, annual staff costs at BX have risen to 2 billion pounds, from 1.8 billion pounds.
Venkat is under pressure to find ways to boost Barclays’ tumbling book value ahead of an investor presentation in February when he will unveil a fresh strategy.
Since taking over as CEO, the veteran banker has grappled with the fallout from a trading blunder that cost the bank hundreds of millions of dollars.
He also faces a prolonged battle to maintain morale across Barclays’ investment bank, where a talent exodus is hindering attempts to compete with European rivals such as Deutsche Bank , BNP Paribas and UBS.
Barclays’ share price has fallen 26% since Venkat took charge on Nov. 1, 2021, while Deutsche’s shares are little changed and HSBC’s have gained 37%.
Managers across teams within BX have been working with effectively frozen budgets this year and told that costs must be reduced in 2024, a second source in the division told Reuters.
Venkat signalled on Oct 23 that Barclays will embark on further restructuring in preparation for its Feb. 20 presentation, which is seen as a key opportunity for the bank to convince shareholders that it has a plan to lift its valuation.
Barclays is “evaluating material structural cost actions”, Venkat said when it reported disappointing third quarter results in October.
Barclays has been working with Boston Consulting Group on a strategy review, focused on which parts of the business to invest in and which should be reduced or sold.
It is also reviewing options for its payments business among other measures, Reuters reported in July.
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