More job cuts could be at risk at Barclays after it revealed a three-year plan to axe £2bn of costs and return more money to investors in an effort to revive the UK bank’s flagging share price.
In a series of changes announced on Tuesday, Barclays said it would return £10bn to shareholders and invest in its high-returning UK retail bank.
It also plans to simplify its corporate structure, establishing five divisions spanning retail banking, wealth management and investment banking.
It comes on top of about £1bn already spent over 2023 on restructuring costs, which involved its offices and branches, infrastructure, and staff.
About £300m of that was spent on “rightsizing” its headcount, it said.
The bank did not specify how many jobs are expected to go as part of the sweeping cost-cutting drive in the coming years, after it last year revealed to cut about 5,000 full-time jobs across the global business over 2023, largely affecting back office and support roles.
Max Georgiou, an analyst at Third Bridge, said he thinks a 20 per cent reduction in headcount in the bank’s corporate and investment bank is needed to achieve the savings target, an amount which he said “would not impact day-to-day operations”.
Kathleen Brooks, a research director at XTB, said Barclays’ new financial targets “set a high bar” and involve “building a greater institution than what Barclays is today”, but added that will mean job cuts.
The update was shared alongside the bank’s full-year financial results which showed declining profits. It made a pre-tax profit of £6.6bn over 2023, six per cent lower than the previous year and a slightly bigger drop than analysts were expecting.
Over the final three months of the year, profits plunged by 92 per cent to £110m, from £1.3bn the previous year, as the restructuring efforts weighed.
The bank’s first strategy update in more than a decade marks a test for CS Venkatakrishnan, the bank’s chief executive, after he succeded Jes Staley in late 2021. Shares in the British bank rose as much as seven per cent after the announcement Tuesday.
“Our new three-year plan, which we will be announcing at the investor update today, is designed to further improve Barclays’ operational and financial performance, driving higher returns, and predictable, attractive shareholder distributions,” said Mr Venkatakrishnan.
Mr Venkatkrishnan was awarded £4.6m in pay and bonuses for 2023, including a £1.4m annual bonus, according to the bank’s annual report published on Tuesday. His total pay package was down from £5.2m in 2022.
Barclays is planning to keep costs tight, aiming for efficiency savings totalling £2bn by 2026. It aims to reduce its cost-to-income ratio, the amount it spends on running the business as a percentage of the amount it generates in income, to 63 per cent this year, compared to 67 per cent last year.
