According to the latest report, Barclays, one of the world's largest commercial banks, is developing a spending reduction plan of up to £ 1 billion ($1.25 billion), which may involve layoffs of up to 2000 people.
At CEO C S. Under the leadership of Venkatakrishnan (later abbreviated as Venkat), Barclays' management is evaluating plans to improve profitability. According to a person familiar with the Barclays plan, as part of it, if fully implemented, it may result in the reduction of 1500 to 2000 jobs.
The insider also pointed out that potential layoffs will mainly focus on Barclays Executive Services (referred to internally as "BX"), which may become an important part of the overall goal of the group to reduce expenses by up to £ 1 billion in the coming years. The cost reduction target of £ 1 billion is equivalent to approximately 7% of the bank's potential annual operating expenses of £ 15 billion in 2022.
The most affected department - BX
The BX department was established in 2017, integrating the bank's two main business units - UK retail banking and international business, with the aim of eliminating duplicate business and implementing post crisis risk management rules.
In recent years, the number of BX employees has increased significantly, and costs have also skyrocketed. According to regulatory documents, as of the end of 2022, the number of employees in the department has increased from 20000 at the end of 2017 to approximately 22300, currently accounting for more than a quarter of Barclays' total employees. At the same time, the average annual salary of BX employees has increased from £ 1.8 billion to £ 2 billion.
Previously, there have been reports that Barclays is working hard to reduce expenses, including cutting bonuses and layoffs in its retail and investment banking businesses, but there have been no reports of measures to reduce BX.
According to insiders, discussions about BX layoffs are still ongoing, and Barclays may decide to prioritize layoffs in other areas.
Another source from the department told Reuters that the managers of various teams within BX have been effectively freezing their budgets this year and have been informed that they must cut costs in 2024.
Plan a new strategy for next year
At the investor briefing in February next year, CEO Venkat will unveil a new strategy. Prior to this, he has been searching for ways to boost Barclays' declining book value.
Since Venkat took over as CEO at the end of 2021, he has been working hard to address the consequences of a costly trading error by the bank in the United States. The bank had previously suffered heavy losses due to excessive issuance of securities in the United States, resulting in a total of £ 1.6 billion in litigation and behavioral charges in 2022.
Since he took office, Barclays' stock price has fallen by 26%, while its competitor Deutsche Bank's stock price has remained almost unchanged, while HSBC's stock price has risen by 37%.
Barclays' disappointing third quarter results released in October have led Venkat to state that the bank is evaluating 'significant structural cost actions'.
Venkat hinted last month that Barclays will embark on further restructuring in preparation for its important report on February 20th next year. This is seen as a key opportunity for Barclays to demonstrate to shareholders that it has a plan to increase its valuation.
It is reported that Barclays has been collaborating with Boston Consulting Group to conduct a strategic assessment, focusing on which businesses to invest in and which should be reduced or sold.