As part of its aggressive cost management program, British
) recently announced to move 4000 jobs overseas. Eric
Brommensath, the company's co-CEO of corporate and investment
banking, briefed that the shift of these positions to more
economic locations abroad would enable cost savings of £250
million ($381 million).
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The jobs to be relocated pertain to the administration and
management of computers and data. The move is expected to be
complete by 2015, but the company is yet to divulge the future
locations of these jobs.
"Go-To" Bank for Its Shareholders
Barclays is in the process of rationalizing its branch operations
by primarily focusing on mass affluent market. This is part of
its "Transform Programme," as Barclays is molding to become
"Go-To" bank for its stakeholders.
Of late, the company was involved in restructuring its Europe
Retail and Business Banking by reducing headcount by about 2,000
and distribution network by 30%.
Overseas Job Move: An Attempt to Repair Its
The London Interbank Offered Rate (LIBOR) manipulation scandal
imposed a fine of £290 million ($453 million) on Barclays in Jun
2012, partly tarnishing the company's reputation. Antony Jenkins,
who stepped in as the CEO right after the scandal, seems to
reinstate the company's reputation by doing away with embroiled
Moreover, the latest job relocations will result in overall cost
reduction, thereby enabling the company's increased returns to be
used in financing the Transform Programme.
Increase in Leverage Ratio Requirement
Notably, Prudential Regulation Authority (PRA) has increased
Barclays' leverage ratio target from 2.5% to 3.0% by the end of
2015. Further, Barclays has to raise capital worth £1.7 billion
($2.7 billion) to withstand losses, risks and fines as per the
new guidelines. However, complying with the protocol may require
the company to compress its lending, which may hamper its
Nevertheless, Barclays is proposing an agreement with PRA and the
actual proceedings will become known to investors in the next 4
Amid a volatile economic environment, where all the other
strategies to improve profitability failed, Barclays was
compelled to adopt aggressive cost cutting measures - comprising
layoffs and job shifts. However, the proposed job shifts will
strengthen the company's footprints worldwide and boost its
Currently, Barclays carries a Zacks Rank #4 (Sell), offering an
unfavorable investment proposition.
Some better performing foreign banks worth considering are
Mitsubishi UFJ Financial Group, Inc.
Sumitomo Mitsui Financial Group Inc.
) - both with a Zacks Rank #1 (Strong Buy), and
Lloyds Banking Group plc
) - with Zacks Rank #2 (Buy).