April 24, 2024

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Barclays (BCS) Plans to Slash Hundreds of Investment Bank Jobs

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Barclays (BCS) Plans to Slash Hundreds of Investment Bank Jobs

Barclays PLC BCS plans to cut several hundred jobs across its investment bank division. The cuts, expected to take place in the coming months, are a result of the bank’s annual review process. The news was first reported by Bloomberg, citing people familiar with the matter.

The slashes are expected to affect the workforce in global markets, research and BCS’ investment banking arm.

Barclays stated, “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. However, there are no finalised numbers for this year’s review.”

Notably, the move is part of the firm’s continued efforts to reduce costs and boost the unit’s profits.

Amid the slump in global deal-making activities and higher-than-usual attrition among dealmakers, the performance of Barclays’ investment banking unit has been weak for some time now.

Moreover, because Barclays’ investment bank utilizes more capital than the other divisions that yield higher returns, investors have been raising concerns with the firm in relation to the sustainability of its Wall Street operations.

To address the concerns, the bank’s CEO, C S Venkatakrishnan, has outlined several strategies aimed at enhancing the unit’s profits, which include focusing on strengthening its advisory services and equity underwriting offerings.

Along with this, BCS has been increasing investment in other areas within the bank, like wealth management, U.S. credit card and global payments activities.

Venkatakrishnan said last month, “The simple way to think about it is that we’re looking for the investment bank to grow and to contribute more while consuming less. The investment bank is a critical part of Barclays and will continue to be an important part of Barclays. I’m equally clear that there is a lot more to do. Our investment bank has to be higher returning. And, relatively speaking, it has to become a smaller part of Barclays.”

In September 2023, a Bloomberg report noted that Barclays was intending to eliminate hundreds of jobs across its trading and investment bank divisions. Separately, Reuters reported that BCS was considering trimming 400 jobs in its retail banking business as part of its broader strategic review.

Persons familiar with the matter said that Barclays planned to eliminate around 5% of its client-facing employees in the trading business, along with a number of dealmakers globally, and restructure teams within its U.K. consumer-banking business.

This was also part of Barclays’ annual evaluation of performance and the cuts were unrelated to the one in the retail banking operation.

Over the past six months, BCS shares on the NYSE have gained 21% compared with the industry’s rise of 12.3%.

 

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Currently, Barclays carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Job Cuts by Banks in the United States

According to three notices filed with the State Labor Department at the beginning of this month, Citigroup Inc. C will lay off 286 New York City-based employees.

The workforce reduction is set to take effect before May 3. It will comprise 239 employees in the primary banking unit, 44 in the global markets broker-dealer units and three in a technology unit, according to the Worker Adjustment and Retraining Notifications.

This is in line with Citi’s plans to shed 20,000 positions by 2026, as it continues its largest revamp in a decade and a half.

Citi intends to reduce its management layers from 13 to eight. It expects to complete its organizational simplification initiative by the end of first-quarter 2024.

Last month, the Wall Street Journal reported that Morgan Stanley MS plans to lay off hundreds of workers from its wealth management (“WM”) division, a move that is expected to impact less than 1% of the unit’s employees.

The move came as the investment banking giant seeks to reduce costs amid economic uncertainty and concerns regarding the trajectory of interest rate cuts by the Federal Reserve.

Morgan Stanley has been focusing more on its WM segment and less on the institutional securities segment (constituting trading and investment banking) over the past few years. This is because the WM segment is less dependent on the capital markets and is a less volatile revenue source.

The WM segment became an important profit-making unit for MS post the acquisitions of Eaton Vance and E*Trade Financial under former CEO James Gorman.

However, last year, the segment’s revenues were flat year over year.

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