Barclays bank is reportedly going to axe thousands of jobs as part of a strategic shake-up to free up its existing capital, and to focus on areas where the chief executive Anthony Jenkins thinks the bank has a more “competitive advantage.” At least 19,000 jobs are expected to be lost in total, 9,000 of these jobs are reportedly going to be lost in the UK.
The Cost-cutting Plan
The investment banking arm of Barclays currently employees 5,900 staff in Europe and 32,900 people in the UK, most of the job cuts are expected to take place this year and will come to an end in late 2016. Barclays’ shares are reported to have dropped by 11% this year which has most likely encouraged Anthony Jenkins to look at how he could prevent the bank’s shares falling any further. He is expected to declare the closure of particular business areas which will result in the job losses across income and emerging market commodities.
The creation of Barclays ‘bad bank’ will separate the bank’s failing assets from its more productive and profitable ones. The bank will accommodate £100 billion worth of the failing assets that feature on Barclays’ balance sheet. Antony Jenkins reportedly has referred to the creation of Barclay’s ‘bad bank’ as “a bold simplification of Barclays.”
The bank’s previous reported fall in shares due to its investment banking business has had such a negative impact that the bank’s employees are unfortunately going to experience the full repercussions of these loses.
Mr Jenkins is reported to have sent a memo to the bank’s staff last month attempting to quell emerging concerns employees had at the time about this week’s confirmed job cuts:“Regulatory developments and the macro-economic environment are having a significant effect on some parts of our business which we need to address proactively and decisively.” He also stated in the memo:“The future of Barclays will be as a strong, focused, international bank. And the investment bank will continue to be a part of that mix.”
What Experts say
Analysts and stockbrokers like Richard Hunter, the head of equities at Hargreaves Lansdown are welcoming Barclays’ decision to cut its staff, in a statement he said:“The news has been well received, although this is unquestionably a long term game.” He also commented that: “The separation of non-core assets, a continued reduction of costs and a streamlining and focus on more profitable operations all seem like strategic sense.”
It is too early to speculate the full extent of the implications for Barclays’ employees as no one has stepped forward to speak out against the job cuts. What is known is that with the job cuts looming staff at the bank will have to face some tough decisions in regards to their careers. There may be the opportunity for some staff to transfer internally, but for other unlucky staff members, this may not be a possibility.
This is an extreme reform for the bank and most likely an unexpected turn of events for Barclays’ employees who will be affected by the cost-cutting plan. The bank’s announcement of these job cuts demonstrates that job security, even with a major firm or company is never guaranteed. There are instances where sudden and sometimes anticipated dynamics within companies change, revealing the true nature of how quickly the pendulum can swing between job security and insecurity.