The shares of Barclays Plc (NYSE: BCS) garnered the market’s attention following its announcement revealing the decision to slash expenses by up to £1 billion (or ~$1.25 billion) over the upcoming years by implementing several fresh initiatives, including job cuts. The stock of Barclays ended Friday’s trading session at $7.22, up 2.12%, or $0.15, from its prior close.
The London-based banking behemoth intends to reduce its workforce by 2,000 positions, with a main focus on streamlining the financial institution’s back-office functions.
The intended decision mirrors the bank’s goal of propping its earnings, which declined in the recent third quarter. In this regard, the bank’s CEO, Venkatakrishnan, and other senior executives are assessing plans for containing expenses.
According to the report by Reuters, the anticipated workforce reduction is expected to primarily occur at Barclays Execution Services (BX). BX, established six years ago to eliminate duplication and enforce post-crisis risk administration regulations, was established to integrate support functions for the bank’s two major business units: UK retail banking and international operations.
Notably, the annual staff expenses of BX rose to £2 billion from £1.80 billion, and its employee count grew to roughly 22,300 at the end of 2022 from 20,000 six years ago. BX currently represents over 25% of the total Barclays staff.
In October, while reporting a year-on-year decline in Q3 earnings, the CEO acknowledged a decrease in income from the UK. In response, the CEO mentioned that the bank is assessing ways to minimize structural expenses, aiming to bolster profitability. Furthermore, it was noted that the process might lead to additional expenses in the fourth quarter.
Over the past few years, Barclays has made efforts to slash costs by reducing bonuses and jobs in its retail and investment banking divisions.
Notably, in September, the British workers union, Unite, representing Barclays employees, accused the bank of slashing 450 staff against the backdrop of a heightened cost of living.
The cost reduction plan is expected to keep the stock of Barclays range-bound with a slight bullish bias in the short term.
The historical price chart indicates that the stock of Barclays is ascending after consolidating at $7.20. The next resistance is anticipated to be only near $7.80. Additionally, the stock has closed above its 50-day moving average, and the stochastic indicator is ascending towards the bullish zone. Therefore, we anticipate the stock of Barclays to remain in an uptrend in the near term.
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