Barclays overhaul welcomed by investors, but fears raised about further job cuts
Barclays has announced plans to overhaul the bank, which has been welcomed by investors but has raised concerns about more job losses.
The bank aims to save around £1 billion this year by becoming more efficient and hopes to save a total of £2 billion by 2026. Barclays will simplify its structure by reorganising divisions and focusing less on its large investment bank.
This is the first major strategy plan from the British banking giant in several years and it aims to return at least £10 billion to shareholders over the next three years. Barclays' share price rose about 7% on Tuesday following the news.
However, there are worries about more job losses across the business. Barclays has already spent about £350 million on reducing its staff numbers in the last three months of last year, resulting in around 5,000 full-time job losses mainly affecting back office and support staff and UK operations.
The bank also spent about £88 million on closing more UK branches. Barclays has announced that it doesn't have a "specific headcount target" for job cuts as part of its big changes this year.
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The bank had an average of 94,800 staff working worldwide at the end of 2023. Experts believe these changes will affect the bank's employees.
Russ Mould, investment director at AJ Bell, said: "There is a common theme among companies: increase dividends and cut costs to keep shareholders happy."
Kathleen Brooks, research director at broker XTB, explained: "Barclays' strategic review was punchy, and it essentially boils down to two things: cut costs aggressively and boost profits and continue to return capital to shareholders, to the tune of £10 billion by 2026."
She added that the new financial targets "will require job cuts", even though the bosses would not specify how many. As part of the reorganisation, Barclays plans to reduce the share of its investment bank, which currently makes up about two thirds of the group's total capital allocation.
Barclays aims to reduce the amount of risk-weighted assets held in their investment bank to about 50% by 2026. The bank's chief executive, CS Venkatakrishnan (also known as Venkat), has emphasised the bank's desire to grow and invest in the UK.
He expressed confidence in the UK "as a place to do business and a place from which to do business". The bank shared these plans along with its end-of-the-year financial results showing a recent slump in profits.
In 2023, Barclays made a pre-tax profit of £6.6 billion, which is 6% lower than last year and slightly more than what analysts predicted. There was a dramatic 92% drop in the final three months of 2023, with profits falling to £110 million, compared to the previous years £1.3 billion, as a result of ongoing restructuring work.
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