Find us on...
- Products & Services
- Sectors & Roles
- Report Store
- Contact Us
- Request a demo
Barclays to cut 19,000 jobs in major shakeup
Barclays has today announced that it is to cut 19,000 jobs by the end of 2016 as it plans a major operational shakeup.
According to the announcement, almost half the job losses (around 7,000) will be in the UK, with Barclays investment arm most heavily affected as CEO Antony Jenkins comes under pressure to increase profits at the bank.
Barclays also announced plans to set-up a so-called ‘bad bank’ to manage, and then either run down or sell off £115bn (approximately $179.7bn) of non-core operations. Unsurprisingly, this includes around £90bn (approximately $140.6bn) of investment banking assets, but more interestingly, also all of its European banking operations, which is estimated to amount to £16bn (approximately $25bn).
This means a reversal of the modern banking trend of expansion beyond home borders and what Jenkins terms ‘a bold simplification of Barclays’ will mean that the bank’s UK retail banking operations and its Barclaycard credit card division in particular will all assume increased importance.
Jenkins’ comments accompanying the announcement suggest he feels that the bank has swelled to too great a size and consequently strayed into areas in which it perhaps is not best equipped to operate. Upon announcing the major operational changes, the bank’s CEO stated: ‘We will be a focused international bank, operating only in areas where we have capability, scale and competitive advantage.’
Although today’s announcement outlined a three year plan, it is thought that the majority of the losses (around 14,000) will occur in 2014, with around 8,000 of these believed to be in Britain. Of those 14,000, it is estimated that 2,000 will be in investment banking, an area set to see 5,000 job losses between now and 2016 and which saw revenues slump by 28% in Q1 2014.
Early reaction to the news was mixed, with many citing the loss of British jobs as a major worry. Unions expressed concern that there may be further retail branch closures in the offing, although this remains conjecture. Dominic Hook, a Unite national officer, stated: ‘These have been extraordinarily turbulent times for ordinary Barclays workers who have worked hard to keep the bank on track against a backdrop of continued uncertainty and redundancies. The bank needs to recognise their tireless work to put customers first while jobs have been lost and give reassurances over their futures.’
This will undoubtedly be a sentiment echoed by many members of the British public but the market’s reaction was more positive, with Barclays shares up 5% in early trading.
As Richard Hunter, head of equities at Hargreaves Lansdown stockbrokers states: ‘ this is unquestionably a long term game,’ and it remains to be see if the changes will have the desired bottom-line impact. It may however, be a sign of things to come and banks consider simplifying their operations.
For further reading, Click here for a full SWOT Analysis of Barclays