Barclays readies hundreds of job cuts in investment bank

BARCLAYS is preparing to cut several hundred jobs within its investment bank division as the firm embarks on a yearslong efforts to trim costs and boost profits within the unit, according to sources familiar with the matter.

The cuts will affect staffers in global markets, research and the firm’s investment banking arm, according to the sources, 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 sources 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, which noted it has not finalised the number of roles included in this year’s review.

In recent months, Wall Street giants from Citigroup 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 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 CS 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 on its US$5.5 billion sale to the United States natural gas producer EQT this month.

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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 (S$86 billion) in the coming years and it is 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 per cent.

“The simple way to think about it is that we are looking for the investment bank to grow and to contribute more while consuming less,” Venkatakrishnan said.

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, sources familiar with the matter said.

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