A source who has direct knowledge of the ideas told Reuters that Barclays (BARC.L) is working on measures to save as much as 1 billion pounds ($1.25 billion), which may include the elimination of as many as 2,000 positions, most of which would be in the back office of the British bank.

The upper management of Barclays, under the direction of Chief Executive C.S. Venkatakrishnan, also known as Venkat inside the bank, is currently evaluating several options to increase the company’s profit margins. According to the source, if all of these changes are carried out as planned, 1,500 to 2,000 positions may be eliminated.

On Thursday, a spokeswoman for Barclays chose not to comment on the situation. The prospective layoffs would mostly occur at Barclays Execution Services, also known internally as ‘BX,’ and they would be a component of an overall objective of cutting spending throughout the firm by up to one billion pounds over several years, according to the individual.

In recent years, Barclays has attempted to decrease expenditures by cutting bonuses and employment in its retail and investment banking operations. However, plans to diminish BX and the possible savings have not been highlighted previously.

BX was established in 2017 to eliminate duplication and implement post-crisis risk management regulations. It was created to unify support services for the bank’s two primary business divisions: UK retail banking and overseas.

The cost reduction goal of 1 billion pounds set by Barclays would correspond to around 7% of the bank’s core annual operating expenditures in 2022, which is estimated to be 15 billion pounds.

According to the insider, the conversations over the BX headcount are ongoing, and Barclays may opt to prioritize layoffs in other departments.

Over the past few years, BX’s payroll and overall expenditures have dramatically increased. According to the regulatory filings, its personnel increased to around 22,300 by the end of 2022, up from 20,000 at the end of 2017. It currently accounts for more than a quarter of Barclays’ workers.

During this time, BX’s yearly personnel expenses have increased to a whopping 2 billion pounds, up from 1.8 billion pounds.

There is a lot of pressure on Venkat to find new methods to raise Barclays’ falling book value before he presents a new strategy to investors in February. This presentation is scheduled for February and will take place.

Since taking over as CEO, the seasoned banker has dealt with the aftermath of a trading mistake that resulted in the bank losing tens of hundreds of millions of dollars.

Additionally, he confronts a protracted fight to preserve morale throughout Barclays’ investment bank, where a talent drain is hampering attempts to compete with European competitors such as Deutsche Bank (DBKGn.DE), BNP Paribas (BNPP.PA), and UBS (UBSG.S). He also faces a lengthy battle to maintain morale across Barclays’ retail banking division.

Since Venkat took over as CEO of Barclays on November 1, 2021, the share price has decreased by 26%, while Deutsche’s shares have remained relatively unchanged and HSBC’s (HSBA.L) have increased by 37%.

THE ACTIONS

According to Reuters, a second source within the division stated that managers across all departments within BX have been working with essentially frozen budgets this year and that they have been warned that expenses must be lowered in 2024.

On October 23, Venkat indicated that Barclays would go through more reorganization in preparation for its presentation on February 20. This presentation is a significant chance for the bank to convince shareholders that management has a strategy to raise its valuation; thus, Barclays must take advantage of this opportunity.

When Barclays released its poor third-quarter performance in October, Venkat stated that the company was “evaluating material structural cost actions.”

In collaboration with Boston Consulting Group, Barclays has been reviewing its business strategy to determine which aspects of the company should be expanded upon and which ones should be scaled back or disposed of. According to a Reuters story from July, the company is also considering several possibilities for its payments business.