British
banking giant Barclays is seeking savings of $1.25 billion. Consequently, the
bank plans to lay off up to 2,000 people and part ways with thousands of
investment banking clients who have relatively low capital.
Barclays
aims to increase revenue and drastically cut costs, a move first reported last
week by Reuters. Insiders disclosed that up to 2,000 jobs could be at
risk, primarily within the back office of the British bank, Barclays Execution
Services (internally known as “BX”).
The current
CEO of Barclays, C.S. Venkatakrishnan, is looking for savings as investor confidence in
Barclays has declined during his tenure. The company’s stock market valuation
has fallen by nearly 30%, far from its 2022 peaks.
Layoffs at
Barclays were already talked about at the beginning of this year. However, the
institution planned to lay off 100 employees from the investment banking
division back then. The current cuts are supposed to be much more serious.
This week,
new reports about Barclays’ cost-saving plans have emerged. The Financial
Times reported that as part of the “Minerva” project, the company
might shed many of its investment banking clients.
Cutting Off the Least
Attractive Clients
According
to the latest reports, Barclays is considering either dropping thousands of
investment banking clients or raising capital to take over a business that
manages assets. If the plan to part with some clients is implemented, Barclays
could end relationships with over 2,500 consumers from a group of more than
10,000 clients.
Barclays
uses an internal client management system called “Hector,” which
assigns diamond, platinum, and gold statuses to the most profitable ones. The
rest are classified as silver: those who only transact with Barclays sometimes or whose scale is insufficient to achieve a satisfactory profit.
The
Barclays’ investment banking sector has been targeted because it has grown
substantially and currently accounts for two-thirds of its total risk-weighted
assets. Reducing investment banking assets would mean more funds for
shareholders through dividends and buybacks, thereby increasing their
satisfaction and share price.
The Financial
Times suggests that if the process is conducted decisively, shedding
clients could free up over $20 billion in risk-weighted assets at a cost of
just under 10% of the division’s total revenue.
Since 2022,
the banking industry has witnessed a series of mass job cuts. In June, the CEO
of UBS suggested that, following the acquisition of Credit Suisse, similar cuts
may also await his institution.
British
banking giant Barclays is seeking savings of $1.25 billion. Consequently, the
bank plans to lay off up to 2,000 people and part ways with thousands of
investment banking clients who have relatively low capital.
Barclays
aims to increase revenue and drastically cut costs, a move first reported last
week by Reuters. Insiders disclosed that up to 2,000 jobs could be at
risk, primarily within the back office of the British bank, Barclays Execution
Services (internally known as “BX”).
The current
CEO of Barclays, C.S. Venkatakrishnan, is looking for savings as investor confidence in
Barclays has declined during his tenure. The company’s stock market valuation
has fallen by nearly 30%, far from its 2022 peaks.
Layoffs at
Barclays were already talked about at the beginning of this year. However, the
institution planned to lay off 100 employees from the investment banking
division back then. The current cuts are supposed to be much more serious.
This week,
new reports about Barclays’ cost-saving plans have emerged. The Financial
Times reported that as part of the “Minerva” project, the company
might shed many of its investment banking clients.
Cutting Off the Least
Attractive Clients
According
to the latest reports, Barclays is considering either dropping thousands of
investment banking clients or raising capital to take over a business that
manages assets. If the plan to part with some clients is implemented, Barclays
could end relationships with over 2,500 consumers from a group of more than
10,000 clients.
Barclays
uses an internal client management system called “Hector,” which
assigns diamond, platinum, and gold statuses to the most profitable ones. The
rest are classified as silver: those who only transact with Barclays sometimes or whose scale is insufficient to achieve a satisfactory profit.
The
Barclays’ investment banking sector has been targeted because it has grown
substantially and currently accounts for two-thirds of its total risk-weighted
assets. Reducing investment banking assets would mean more funds for
shareholders through dividends and buybacks, thereby increasing their
satisfaction and share price.
The Financial
Times suggests that if the process is conducted decisively, shedding
clients could free up over $20 billion in risk-weighted assets at a cost of
just under 10% of the division’s total revenue.
Since 2022,
the banking industry has witnessed a series of mass job cuts. In June, the CEO
of UBS suggested that, following the acquisition of Credit Suisse, similar cuts
may also await his institution.
