Barclays plc (BCS - Free Report) recently announced that it will discontinue its wealth management services in 130 countries by 2016, as part of the company’s new strategy. However, the company will concentrate on the remaining wealth management units in 70 markets, which constitute 86% of the global wealth market.
There are about 8000 employees who come under the purview of the planned strategy. The spokesperson for Barclays confirmed that though drastic job cuts are unlikely, there might be some change in the number of employees due to reshuffling.
The latest move by the company is likely to affect thousands of customers with investment capacity of 100,000–500,000 pounds ($160,000-$801,260). Therefore, Barclays formed a new segment called “Private Clients” to cater to their needs.
In the first half of 2013, Barclay’s Wealth and Investment Management division reported adjusted profit before tax of £47 million ($73 million), decreasing 53% from the prior-year period. The figure was disappointing and lagged that of the company’s peers.
Barclays has been going through a rigorous phase of restructuring in an attempt to streamline its business. Going by the new strategy, the company now intends to focus primarily on its areas of comparative advantage and dispose the loss-making underscale units worldwide.
Antony Jenkins who took over as Barclays’ Chief Executive Officer (CEO) in August this year has clearly declared his motive of aggressive cost reduction. He targets to slash 3,700 jobs globally, restrain senior bankers’ remuneration and close unproductive business units across the globe to save $2.6 billion annually.
In the present economic scenario, financial institutions are finding it difficult to deal with rising expenses and the limited scope for increasing income. Hence, most of these institutions are resorting to cost reduction measures such as layoffs and downsizing troubled units/branches.
On Tuesday, a Swiss newspaper reported that Credit Suisse Group AG (CS - Free Report) will cease to offer wealth management services in 50 countries by the end of 2013, thereby saving 4.4 billion Swiss francs ($4.8 billion). Moreover, in May 2013, Morgan Stanley (MS - Free Report) announced its decision to sell the private wealth management unit in India to Standard Chartered PLC by the end of this year.
Currently, Barclays has a Zacks Rank #3 (Hold).