Barclays (BCS) Initiates Job Cuts Across IB & Research Units

Barclays PLC BCS has commenced job cuts across investment banking (IB) and research division, per people familiar with the matter. This move aligns with the company’s £2 billion cost-cutting program in order to boost profitability.

Several hundred staffers in global markets, IB and research will be impacted by this move. The latest dismissals validate a prior Bloomberg report indicating Barclays’ plans to reduce its personnel in the IB division, including trading, advisory services, capital market operations and the international corporate bank.

In a statement, Barclays said, “We regularly review our talent pool to ensure that we can invest in talent and deliver for clients.”

The company has been facing increasing scrutiny about the performance of its IB business. The business requires higher capital compared with other divisions but the returns are relatively low. Further, the company is not likely to allocate additional capital to the IB division even if the global regulations require so.

In the first quarter of 2024, Barclays reported a 3.3% year-over-year decline in IB division revenues. While equities trading revenues grew 25.4%, a 21.5% decrease in fixed-income trading revenues (constituting a larger part of the business) and a 30.2% fall in advisory revenues were the offsetting factors.
 
Despite the move to cut jobs, BCS intends to hire a workforce in areas where it plans to gain additional market share like equity derivatives, European rates and securitized products trading.
 
Also, Barclays is working to build certain areas of its advisory business and has been hiring bankers to help companies navigate the energy transition and those operating in industrials and healthcare industries.

Notably, last year, Barclays lowered its workforce by 5,000 personnel on the back of an industry-wide slowdown in dealmaking activities. These restructuring initiatives are likely to enhance profitability to some extent.

Barclays’ shares have risen 38.1% in the past three months, significantly outperforming the industry’s 6.5% growth.

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

Job Cuts by Other Financial Services Firms

Last month, UBS Group AG UBS, following its acquisition of Credit Suisse, announced its plans to cut jobs in five separate phases, starting this June. In total, 50-60% of former Credit Suisse employees are likely to be made redundant, per a Reuters report.

UBS' plan to reduce costs mainly involves cutting its workforce. According to the source, 30,000 and 35,000 jobs are expected to be eliminated globally.

Approximately 25% to 30% of former Credit Suisse staff could be laid off in the first wave of job cuts in June. The later phases are set to take place in the months of August, September, October and November.

Similarly, this March, Citigroup Inc. C announced its plans to lay off 286 New York City-based employees, according to three notices that the company filed with the State Labor Department.

The workforce reduction 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 the C’s plans to shed 20,000 positions by 2026 as it continues its largest revamp in a decade and a half.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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