Investors cheer Barclays overhaul but concerns raised over further job losses

Barclays has delivered a boost to its shareholders, but raised concerns over further job losses after setting out plans to overhaul the bank.

It is aiming to save about £1 billion from making the bank more efficient this year, and targeting about £2 billion worth of savings in total by 2026.

The fresh cost-cutting drive will see Barclays simplify its structure by reorganising divisions and putting less emphasis on its weighty investment bank.

Shareholders had been eagerly anticipating the update from the British banking giant, which marked the first major strategy plan in several years.

The ambitious shake-up is set to see more money returned to shareholders, with a goal to return at least £10 billion over the next three years.

The news was cheered by investors, with Barclays’ share price rising about 7% on Tuesday to its highest level since late September.

But the update raised concerns over further job losses across the global business.

Barclays said it had already spent about £350 million on “rightsizing” its headcount in the final three months of last year.

This reflects some 5,000 full-time job losses throughout 2023, which mainly impacted its back office and support staff and UK operations.

It also put about £88 million toward closing more of its UK branches.

Barclays said it did not have a “specific headcount target” for how many roles could be reduced as part of the sweeping restructuring efforts this year.

It had 94,800 staff on average working across the global business at the end of 2023.

Experts said the revamp is likely to have an impact on employees at the bank.

“There is a common theme among companies: increase dividends and cut costs to keep shareholders happy,” said Russ Mould, investment director at AJ Bell.

“Staff might not appreciate this strategy as it means they may have to do additional work for the same pay, but running a leaner machine is the playbook for corporates when there is an uncertain economic outlook.”

Kathleen Brooks, research director at broker XTB, said: “Barclays’ strategic review was punchy, and it essentially boils down to two things: cut costs aggressively and boost profits and continue to return capital to shareholders, to the tune of £10 billion by 2026.

“This is exactly the type of message that shareholders love at the moment, and it is why the market has reacted with glee on Tuesday morning.”

But she added that the new financial targets “will require job cuts”, even though the bosses would not specify how many.

As part of the reorganisation, Barclays is planning to reduce the share of its investment bank. The division currently makes up about two thirds of the group’s total capital allocation, which means it dwarfs the retail and wealth arms.

Barclays said it is hoping to bring down the proportion of risk-weighted assets held in the investment bank to about 50% by 2026.

Meanwhile, the bank’s chief executive CS Venkatakrishnan, also known as Venkat, stressed that it wants to focus on growing and investing in the UK.

He said the plan shows confidence in the UK “as a place to do business and a place from which to do business”.

The overhaul was announced alongside the bank’s full-year financial results, which showed profits slumping in recent months.

It made a pre-tax profit of £6.6 billion over 2023, 6% lower than the previous year and a slightly bigger drop than analysts were expecting.

Over the final three months of the year, profits plunged by 92% to £110 million, from £1.3 billion the previous year, weighed down by the restructuring efforts already in motion.