Barclays' Billion-Dollar Savings Quest May Lead to 2,500 Investment Client Cuts

<p>The British
banking giant Barclays aims to achieve cost savings of $1.25 billion. Consequently, the
bank plans to lay off up to 2,000 people and part ways with thousands of
investment banking clients who have relatively low capital.</p><p>Barclays Seeks $1.25
Billion in Savings</p><p>Barclays
aims to increase revenue and drastically cut costs, a move first reported last
week by Reuters. Insiders disclosed that up to 2,000 jobs could be at
risk, primarily within the back office of the British bank, Barclays <a href="https://www.financemagnates.com/terms/e/execution/">Execution</a>
Services (internally known as "BX").</p><p>The current
CEO of <a href="https://www.financemagnates.com/tag/barclays/" target="_blank" rel="follow">Barclays</a>, C.S. Venkatakrishnan, is looking for savings as investor confidence in
Barclays has declined during his tenure. The company's stock market valuation
has fallen by nearly 30%, far from its 2022 peaks.</p><p>Layoffs at
Barclays were already talked about <a href="https://www.financemagnates.com/institutional-forex/barclays-joins-the-layoffs-bandwagon-cuts-100-jobs-in-investment-banking/" target="_blank" rel="follow">at the beginning of this year</a>. However, the
institution planned to lay off 100 employees from the investment banking
division back then. The current cuts are supposed to be much more serious.</p><p>This week,
new reports about Barclays' cost-saving plans have emerged. The Financial
Times reported that as part of the "Minerva" project, the company
might shed many of its investment banking clients.</p><p>Cutting Off the Least
Attractive Clients</p><p>According
to the latest reports, Barclays is considering either dropping thousands of
investment banking clients or raising capital to take over a business that
manages assets. If the plan to part with some clients is implemented, Barclays
could end relationships with over 2,500 consumers from a group of more than
10,000 clients. </p><p>Barclays
uses an internal client management system called "Hector", which
assigns diamond, platinum, and gold statuses to the most profitable ones. The
rest are classified as silver: those who only transact with Barclays sometimes or whose scale is insufficient to achieve a satisfactory profit.</p><p>The
Barclays’ investment banking sector has been targeted because it has grown
substantially and currently accounts for two-thirds of its total risk-weighted
assets. Reducing investment banking assets would mean more funds for
shareholders through dividends and buybacks, thereby increasing their
satisfaction and share price.</p><p>The Financial
Times suggests that if the process is conducted decisively, shedding
clients could free up over $20 billion in risk-weighted assets at a cost of
just under 10% of the division's total revenue.</p><p>Since 2022,
the banking industry has witnessed a series of mass job cuts. In June, <a href="https://www.financemagnates.com/institutional-forex/ubs-ceo-suggests-massive-job-cuts-loom-for-credit-suisses-investment-banking-division/" target="_blank" rel="follow">the CEO
of UBS suggested</a> that following the <a href="https://www.financemagnates.com/terms/a/acquisition/">acquisition</a> of <a href="https://www.financemagnates.com/tag/credit-suisse/" target="_blank" rel="follow">Credit Suisse</a>, similar cuts
may also await his institution.</p>

This article was written by Damian Chmiel at www.financemagnates.com.