Barclays working on $1.25 billion cost savings plan
Barclays, one of the UK’s leading banks, is reportedly working on a cost-saving plan to the tune of $1.25 billion, which could potentially result in cutting as many as 2,000 jobs. The proposed job cuts, mainly in the back office, are part of the bank’s efforts to streamline its operations and improve profitability.
The bank’s Chief Executive, C.S. Venkatakrishnan, also known as Venkat, is leading the charge in reviewing proposals aimed at reducing expenses. If the plans are implemented in full, 1,500 to 2,000 jobs could be on the chopping block. The potential cuts are likely to take place at Barclays Execution Services, or ‘BX’, and are part of an overall target of reducing expenses by up to 1 billion pounds across the group over several years.
The proposed cost-saving initiatives have been well-received by investors, who have been looking for clarity on how the bank plans to translate restructuring costs into tangible savings. Despite the positive reception, analysts are keen to see more details on how long it will take for the benefits to materialize.
Barclays Execution Services, created in 2017 to consolidate support functions for the bank’s two main business divisions, has experienced significant growth in headcount and costs in recent years. Consequently, discussions about staff reductions and cost-saving measures are ongoing, and the bank may choose to prioritize layoffs in other areas.
The pressure is on for Venkat to find ways to improve Barclays’ tumbling book value, with an investor presentation scheduled for February 2023 where he will unveil a fresh strategy. Since taking over as CEO, the bank has faced challenges stemming from a trading blunder and a talent exodus from its investment bank, hindering its ability to compete with European rivals.
The potential job cuts and cost-saving measures have already begun to have an impact on Barclays’ share price, which gained 0.3% following the news, bucking the trend of the FTSE index, which was down 0.3%. Barclays’ shares have fallen 26% during Venkat’s tenure as CEO, and the bank is under pressure to demonstrate to shareholders that it has a plan to increase its valuation.
Barclays has been working with Boston Consulting Group on a strategy review, focusing on which parts of the business to invest in and which should be reduced or sold. The bank is also reportedly reviewing options for its payments business, indicating that more changes could be on the horizon.
As the bank continues to navigate the challenges in the financial sector, its actions will be closely watched by stakeholders and market analysts as they await the unveiling of Barclays’ new strategic plan.