According to Reports, Barclays Plans to Cut 2,000 Jobs to Cut Costs Amid Falling Profitability

Barclays is formulating strategies to reduce its workforce by potentially laying off up to 2,000 employees, a move aimed at mitigating costs and reversing the trend of declining profitability. The London-based bank is reportedly in the process of devising plans to achieve cost savings of up to £1 billion ($1.25 billion) by downsizing primarily its back-office personnel, estimated to be between 1,500 and 2,000 employees, according to information from Reuters.

‍

As of the latest reports, Barclays' shares have exhibited a flat performance on Friday, following a 12% decline in their value over the preceding 12 months. The banking institution's decision to implement job cuts aligns with the overarching objective set by its Chief Executive Officer, C.S. Venkatakrishnan, who is steering efforts to enhance the bank's profitability. These measures are part of the bank's broader plan as it prepares to unveil a new strategic direction in February 2024.

‍

The pressure on Venkatakrishnan to bolster the bank's profits has intensified, given a substantial 27% drop in Barclays' share price since he assumed the role of CEO in November 2021. The proposed job cuts are expected to primarily impact staff within the bank's operational support division, specifically Barclays Execution Services, commonly referred to as BX internally. Established in 2017, BX provides essential back-office support to both the U.K. retail and international banking divisions within Barclays' business structure.

‍

While the cost-cutting initiatives are still undergoing review, there is potential for staff reductions in other segments of Barclays' operations. Currently, Barclays maintains a global workforce of 85,000 employees, with over 22,000 personnel employed in BX, incurring staffing costs amounting to £2 billion. The bank has experienced a notable surge in staffing costs over the past three years, escalating from £8.1 billion in 2020 to £9.3 billion in 2022.

‍

As a financial institution with origins dating back to 1690, Barclays has actively pursued measures to curtail expenditures in recent years, including the reduction of employee bonuses and staff layoffs. In October, CEO Venkat articulated the bank's focus on "increasing productivity" following a reported 4% decline in pre-tax profits for the third quarter.

‍

In its quest to optimize shareholder returns, Barclays has enlisted the expertise of the consulting firm Boston Consulting Group (BCG). The collaboration with BCG is part of an initiative, as reported by Reuters in June, aimed at developing a comprehensive strategy to enhance shareholder value. Both Barclays and BCG have refrained from providing official comments on the matter.

‍