Barclays Readies Hundreds Of Job Cuts In Investment Bank

(Bloomberg) -- Barclays Plc is preparing to cut several hundred jobs within its investment bank division as the firm embarks on a yearslong effort to trim costs and boost profits within the unit, according to people familiar with the matter. 

The cuts will affect staffers in global markets, research and the firm’s investment banking arm, according to the people, who asked not to be identified discussing non-public information. They are expected to take place in the coming months and are part of the firm’s annual cutting of low performers, the people said. 

“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,” Barclays said in an emailed statement. “However, there are no finalized numbers for this year’s review.”

In recent months, Wall Street giants from Citigroup Inc. to JPMorgan Chase & Co. have turned to job cuts in response to the global slump in dealmaking and capital markets activity. At Barclays, the moves come as the company is kicking off a lengthy push to improve the profitability of its investment bank division, which has been stung by that dearth of activity as well as higher-than-usual attrition among dealmakers.

Barclays shares rose 2.5% at 8:53 a.m. in London, making the bank the best performer among UK lenders included in the FTSE 350 Banks Index. 

Read more: Citi Cuts London Investment Bank Jobs as Deal Drought Persists

Barclays has long faced questions from investors about the viability of its Wall Street operations because the investment bank consumes more capital than other, higher-returning divisions across the firm. Last month, Chief Executive Officer C.S. Venkatakrishnan sought to put those questions to rest as he laid out plans for the unit to become more profitable by focusing on boosting its advisory and equity underwriting offerings.

As part of that work, the company has been refocusing its businesses on industries it believes will be most active in the coming years, including financial sponsors and energy companies that are navigating away from greenhouse gas emissions. To that end, Barclays won a mandate to advise Equitrans Midstream Corp. on its $5.5 billion sale to the US natural gas producer EQT Corp. this month.

The investment banking arm’s market share has shrunk in recent years. With the moves, Barclays is hoping to rebuild that share back to the 4.1% it commanded in 2019. 

At the same time, though, the company has vowed to invest more heavily in other areas within the bank, including its UK-focused offerings and its US credit-card arm. For instance, Barclays expects risk-weighted assets to climb by roughly £50 billion ($64 billion) in the coming years and it’s not planning to allocate any of the additional capital to the investment bank.

Managers in the division are also under pressure to trim £700 million in costs by 2026 as they seek to whittle the unit’s cost-to-income ratio down to a percentage in the high-50s. That metric, which shows how much it costs to produce a pound of revenue, ended last year at 69%.

“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,” Venkatakrishnan said last month. 

Bankers on Edge

Inside the investment bank division, staffers have been on edge for months as they awaited executives’ decisions on the fate of the unit, Bloomberg reported late last year.

The division has been reeling from a grim bonus season in which Barclays handed dozens of investment bankers no bonus at all. Tensions have also been running high as executives have spent recent months trying to recover from the period of higher-than-usual attrition last year. 

After those departures, the division’s leaders — Cathal Deasy and Taylor Wright — began offering guaranteed bonuses and paying more to those who threatened to leave, Bloomberg reported last month. Those moves further depleted the bonus pool this year, frustrating bankers who stayed, people familiar with the matter said at the time.

The investment bank “is a critical part of Barclays and will continue to be an important part of Barclays,” Venkatakrishnan said last month. “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.”

(Updates with share performance in fifth paragraph, additional information on targets in eighth.)

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