London - Barclays is considering deeper job cuts that could see its workforce shrink by about a quarter over the coming years, said a person with knowledge of the matter.
The bank, which employed about 132 000 people at the end of December, is reducing staff numbers under a cost-cutting program announced by former CEO Antony Jenkins. Those efforts, if extended, could eventually leave it with fewer than 100 000 employees, the person said. There’s currently no formal plan in place, the person said, asking not to be identified because talks are private.
John McFarlane, 68, who took over as chairman in April, earlier this month ousted Jenkins and pledged to tackle a “cumbersome and bureaucratic” bank, in a move that has sent Barclays shares up about 12 percent. The firm last year announced plans to eliminate some 19 000 jobs by 2016.
“Investors will be pleased to see a focus on cost,” said Edward Firth, head of European bank research at Macquarie Group in London. “Barclays isn’t the most efficient bank and there has been poor delivery of cost control so far, particularly in the investment bank.”
Barclays rose 0.4 percent to 281.25 pence at 9:49 a.m. in London. The shares are up about 16 percent this year.
While McFarlane’s reputation for deep cost cuts at UK insurer Aviva earned him the nickname “Mack the Knife,” he has signaled he will focus on boosting revenue. During a townhall-style presentation this month, he told employees that he aims to double the share price over the next three or four years, according to people who attended the meeting.
“Cost is important,” McFarlane told Bloomberg Television on July 8. “But it’s actually about revenue and increasing revenue growth way over the cost of capital growth.”
The Times of London reported late Sunday that Barclays has a plan to cut more than 30 000 people within two years, leaving fewer than 100 000 staff by the end of 2017.
Barclays said in May 2014 it will cut 7 000 jobs at its securities division, about a quarter of the total, adding to some 12 000 reductions announced earlier that year.
In private meetings, Jenkins had raised the possibility that job-cutting programs and existing efforts to automate back-office functions may eventually leave the London-based bank with fewer than 100 000 employees, though probably not until the medium- or long-term, the person said.
Further job reductions would help bring Barclays in-line with British banks including Royal Bank of Scotland Group and Lloyds Banking Group, which have eliminated thousands of jobs, with some reductions through sales of business units.
RBS cut headcount from 184 500 in 2008 to 89 700 at the end of December, while Lloyds reduced staff numbers from 132 000 to 95 088 over the same period.
“There is significant scope for cost cutting on the retail banking side,” said Sandy Chen, an analyst at Cenkos Securities in London. “As we bank more on mobile than in branches, the bulk of headcount reductions would fall on the retail side. However there’s also a significant opportunity for cost reductions in the investment bank.”
Bloomberg