Barclays is gearing up to lay off several hundred employees within its investment banking division, part of a long-term strategy to cut costs and boost profitability within the unit, sources familiar with the matter told Bloomberg on Wednesday.
The anticipated cuts are part of the company's annual performance-based workforce reduction process and will take place in the coming months, according to the sources.
“We regularly review our talent pool to ensure that we can invest in high-performing talent, execute on our strategy, and deliver for our clients,” Barclays said in an emailed statement to Bloomberg. “However, there are no finalized numbers for this year’s review.”
The bank in January revealed that it cut 5,000 jobs last year from its workforce of 84,000 to “simplify and reshape the business” and to save £1 billion in costs — about 7% of the lender’s annual operating expenses.
Barclays went further last month, laying out a three-year plan to improve performance while cutting £2 billion in costs. The reorganization will split the bank into five operating divisions: its U.K. retail business, U.K. corporate bank, investment bank, U.S. consumer bank, and its private bank and wealth management. Simultaneously, Barclays pledged to return £10 billion to its shareholders over the next two years through buybacks and dividends.
The performance-based job cuts come roughly a week after Barclays CEO C.S. Venkatakrishnan said his investment bankers are a step behind their counterparts in the bank’s trading division in their efforts to bolster returns for the company.
“The parts where we need greater [return on equity] efficiency is investment banking fees. There, we are much more debt capital markets heavy than the U.S. banks are, and that’s where we’ve got to be more efficient,” Venkatakrishnan said at an investor conference, according to Bloomberg.
The job cuts come, too, as a result of the slump in dealmaking and higher-than-usual attrition among dealmakers, the wire service noted.
Barclays failed to give bonuses to dozens of its investment bankers. But Cathal Deasy and Taylor Wright, the bank’s global co-heads of investment banking, offered guaranteed bonuses and more pay to some employees who threatened to leave the company, Bloomberg reported. This further depleted the bonus pool and frustrated bankers who decided to stay.
Venkatakrishnan put forward a plan last month that aims to shift the focus toward raising Barclays’ advisory and equity underwriting offerings.
The bank expects its risk-weighted assets to increase by nearly £50 billion in the years ahead but does not plan to keep any additional capital for the investment bank. Managers in the investment bank must shed £700 million in costs by 2026 as the bank seeks to bring down the unit’s cost-to-income ratio, Bloomberg reported.
Barclays achieved an ROE of 9% last year and disclosed its plans to raise the figure to above 12% in 2026.
The bank generated £1.96 billion in investment banking fees last year — a 12% drop from a year earlier.
