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Barclays (BCS) Plans Around 2,000 Job Cuts to Save $1.25B
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Barclays PLC (BCS - Free Report) has been planning to reduce expenses by $1.25 billion through the elimination of around 1,500-2,000 jobs, specifically in its segment, Group Execution Services, known as BX. This was reported by Reuters that quoted a person with direct knowledge of the proposals.
BCS operates through two divisions - Barclays UK and Barclays International. BX is a group-wide service company that offers support to both the divisions by providing technology, operations and functional services across the Group.
Per macro trends data, Barclays employed a total of around 87,400 people in 2022 compared with 80,800 headcount in 2019.Thus, its operating costs had increased significantly in the recent years specifically due to a rise in employee headcount.
Another source familiar with the matter stated, “Managers across teams within BX have been working with effectively frozen budgets this year and told that costs must be reduced in 2024”.
The chief executive officer, C. S. Venkatakrishnan, stated during the third-quarter results, “You should think of this structural cost action as in part of the investor update which we will provide in February”. He further added, “But you should think of it as not something related to a quarter or the last two quarters, but part of the larger structural improvement of efficiency and productivity for the bank”.
Management shared its guidance of achieving Group cost to income ratio of low 60% in 2023. Moreover, Barclays’ initiatives to improve efficiency over the last few years have been bearing fruit, as evident from a fall in expenses. While total operating expenses increased 2022, the same declined at a compound annual growth rate of 2.4% over the six-year period ended 2021. The downward trend continued in the first nine months of 2023.
BCS’ shares have lost 9.1% on the NYSE in the past six months against the industry’s 7.8% growth.
Throughout 2023, finance firms globally had to navigate their way through the current tough economic environment. Hence, to remain profitable amid the high interest rate environment and hovering recession fears, companies are undertaking several restructuring efforts, majorly job cuts.
This week, Citigroup Inc. (C - Free Report) commenced the elimination of various job positions as part of its major organizational overhaul process. Per a Yahoo Finance’s article quoting Bloomberg, the job cuts involve approximately 10% of Citigroup’s senior manager roles aggregating to around 300 managers.
C’s press release said, “Today we shared with our colleagues the next layer of changes across many of our businesses and functions as we continue to align Citi’s organizational structure with our new, simplified operating model. As we’ve acknowledged, the actions we’re taking to reorganize the firm involve some difficult, consequential decisions, but we believe they are the right steps to align our structure with our strategy and ensure we consistently deliver excellence to our clients”.
Last month, in an effort to streamline business operations, Ally Financial Inc. (ALLY - Free Report) started trimming its workforce, a move that is expected to impact less than 5% of ALLY’s overall headcount.
Spokesperson Peter Gilchrist has said in an emailed statement that the workforce reduction will occur across divisions and is not restricted to a single line of business.
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Barclays (BCS) Plans Around 2,000 Job Cuts to Save $1.25B
Barclays PLC (BCS - Free Report) has been planning to reduce expenses by $1.25 billion through the elimination of around 1,500-2,000 jobs, specifically in its segment, Group Execution Services, known as BX. This was reported by Reuters that quoted a person with direct knowledge of the proposals.
BCS operates through two divisions - Barclays UK and Barclays International. BX is a group-wide service company that offers support to both the divisions by providing technology, operations and functional services across the Group.
Per macro trends data, Barclays employed a total of around 87,400 people in 2022 compared with 80,800 headcount in 2019.Thus, its operating costs had increased significantly in the recent years specifically due to a rise in employee headcount.
Another source familiar with the matter stated, “Managers across teams within BX have been working with effectively frozen budgets this year and told that costs must be reduced in 2024”.
The chief executive officer, C. S. Venkatakrishnan, stated during the third-quarter results, “You should think of this structural cost action as in part of the investor update which we will provide in February”. He further added, “But you should think of it as not something related to a quarter or the last two quarters, but part of the larger structural improvement of efficiency and productivity for the bank”.
Management shared its guidance of achieving Group cost to income ratio of low 60% in 2023. Moreover, Barclays’ initiatives to improve efficiency over the last few years have been bearing fruit, as evident from a fall in expenses. While total operating expenses increased 2022, the same declined at a compound annual growth rate of 2.4% over the six-year period ended 2021. The downward trend continued in the first nine months of 2023.
BCS’ shares have lost 9.1% on the NYSE in the past six months against the industry’s 7.8% growth.
Image Source: Zacks Investment Research
BCS presently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Throughout 2023, finance firms globally had to navigate their way through the current tough economic environment. Hence, to remain profitable amid the high interest rate environment and hovering recession fears, companies are undertaking several restructuring efforts, majorly job cuts.
This week, Citigroup Inc. (C - Free Report) commenced the elimination of various job positions as part of its major organizational overhaul process. Per a Yahoo Finance’s article quoting Bloomberg, the job cuts involve approximately 10% of Citigroup’s senior manager roles aggregating to around 300 managers.
C’s press release said, “Today we shared with our colleagues the next layer of changes across many of our businesses and functions as we continue to align Citi’s organizational structure with our new, simplified operating model. As we’ve acknowledged, the actions we’re taking to reorganize the firm involve some difficult, consequential decisions, but we believe they are the right steps to align our structure with our strategy and ensure we consistently deliver excellence to our clients”.
Last month, in an effort to streamline business operations, Ally Financial Inc. (ALLY - Free Report) started trimming its workforce, a move that is expected to impact less than 5% of ALLY’s overall headcount.
Spokesperson Peter Gilchrist has said in an emailed statement that the workforce reduction will occur across divisions and is not restricted to a single line of business.