News: Barclays £1 billion cost-saving strategy may result in 2,000 layoffs

Strategic HR

Barclays £1 billion cost-saving strategy may result in 2,000 layoffs

The envisaged job reductions are expected to primarily focus on Barclays Execution Services, internally denoted as 'BX.'
Barclays £1 billion cost-saving strategy may result in 2,000 layoffs

Barclays is in the process of developing strategies to achieve savings of up to £1 billion (equivalent to $1.25 billion), a move that may entail the potential reduction of around 2,000 positions, primarily concentrated in the back-office functions of the British bank. 

According to Reuters, Barclays managers, headed by Chief Executive C.S. Venkatakrishnan, is currently evaluating plans aimed at enhancing the institution's profitability. If these proposals are fully implemented, they could potentially result in the reduction of 1,500 to 2,000 jobs. 

The proposed job cuts are anticipated to be concentrated mainly at Barclays Execution Services, internally referred to as 'BX,' and would contribute to an overarching objective of reducing expenses by up to £1 billion across the entire group over the course of several years. 

While Barclays has previously taken measures to trim expenses by reducing bonuses and jobs in its retail and investment banking sectors, the potential downsizing of BX and the associated cost savings have not been disclosed until now. 

Established in 2017 to centralise support functions for the bank's two primary business divisions, UK retail banking and international operations, BX was structured to eliminate redundancy and enforce post-crisis risk management regulations.

Barclays' targeted cost savings of £1 billion would equate to approximately 7% of the bank's underlying annual operating expenses, which stood at £15 billion in 2022. Ongoing discussions about the headcount within BX are in progress, and the possibility remains that Barclays might opt to prioritise staff reductions in other areas, revealed the same report. 

BX has experienced significant growth in both staffing and costs in recent years. The headcount increased to around 22,300 by the end of 2022, up from 20,000 at the close of 2017, now constituting over a quarter of Barclays' total staff, as per regulatory filings. 

Simultaneously, annual staff costs at BX have climbed to £2 billion from £1.8 billion. Under the leadership of Venkat, Barclays is facing pressure to devise strategies to enhance the bank's declining book value. This challenge is particularly crucial as Venkat is set to unveil a fresh strategy during an investor presentation in February.

Since assuming the role of CEO, the seasoned banker has grappled with the repercussions of a trading blunder that incurred substantial losses for the bank. Venkat is also confronted with a sustained challenge to uphold morale within Barclays' investment bank, where a talent drain is impeding efforts to compete with European counterparts such as Deutsche Bank, BNP Paribas, and UBS. 

Barclays' stock price has declined by 26% since Venkat assumed leadership on November 1, 2021, in stark contrast to Deutsche's stable shares and HSBC's notable 37% increase. Actions are underway within BX, with managers operating under essentially frozen budgets this year and being informed of the imperative to reduce costs in 2024, according to a second source within the division. 

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Topics: Strategic HR, #Layoffs, #HRTech, #HRCommunity

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