Barclays Plc (LON: BARC) could shed up to 2,500 clients as it seeks to achieve significant cost savings of up to $1.25 billion. The British multinational bank was recently in the news as rumours emerged that it was looking to fire up to 2,000 employees within its back office operations.
Barclays Could Shed up to 2,500 Clients in a Cost-Cutting Move
Additionally, Barclays is considering streamlining its investment division, which might result in the departure of thousands of investment banking clients who have relatively low capital.
The move towards cost savings and restructuring is driven by Barclays’ desire to boost revenue and significantly reduce costs. This decision comes after reports of declining investor confidence in the bank during the tenure of CEO C.S. Venkatakrishnan, which has led to a nearly 30% drop in the company’s stock market valuation from its 2022 highs.
While discussions of layoffs at Barclays surfaced earlier this year, they were relatively modest, with plans to lay off 100 employees from the investment banking division. However, the current round of cuts is much more substantial in scale.
Recent reports shed light on Barclays’ cost-saving plans, revealing that the company might part ways with a significant number of its investment banking clients as part of the “Minerva” project.
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The bank is considering the option of either terminating relationships with thousands of investment banking clients or raising capital to acquire an asset management business. If Barclays decides to shed some of its clients, it could sever ties with more than 2,500 customers out of a pool of over 10,000 clients.
Barclays employs an internal client management system called “Hector,” which categorises clients as diamond, platinum, gold, or silver based on their profitability and transaction history. Clients categorised as silver are those who transact with Barclays occasionally or do not generate significant profits.
The investment banking sector within Barclays has become a prime target for cost reduction efforts, as it currently accounts for approximately two-thirds of the bank’s total risk-weighted assets.
The Financial Times suggests that if Barclays proceeds with this client shedding process decisively, it could release over $20 billion in risk-weighted assets at a cost of just under 10% of the division’s total revenue.
