There’s not long to go now. In February 2024, Barclays announced its intention of cutting £2bn ($2.7bn) of costs, of which £700m were to come out of the corporate and investment bank by 2026.
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So, how’s that going?
Today’s results from Barclays show that operating costs in the investment bank rose 4.8% in the first nine months of this year compared to last. They now stand at £6bn. Before Barclays began cutting costs, in the first nine months of 2023, they were £6.2bn.
Therefore, there’s still, £500m of cost-cutting to go.
Barclays has been cutting jobs in its investment bank, so why have costs risen this year? The bank blames a thorny array of, “inflationary headwinds, higher performance costs and expenses associated with supporting the business strategy.” The implication is at least that bonuses might be up, and that costs have also been inflated by severance charges.
Barclays still says it’s on track to meet its £2bn top level cost reduction figure in 2026. However, as the chart below shows, it also says that this year’s group-wide cuts have been eroded by an array of unforeseen circumstances.
In the investment bank itself, Barclays aspires to achieve a cost income ratio in the “high 50s” in 2026. In the third quarter, it was stuck at 65%. As ever, revenues therefore need to rise a lot, or costs need to fall.
The hope has long been that Barclays’ investment bankers would take up the slack. But in the first nine months of this year, their revenues fell 2% compared to last. Barclays fixed income traders are, instead, the heros of 2025 with an 18% revenue increase, but they’re being afflicted by a squeeze on risk weighted assets as the bank attempts to withdraw capital from the area. This might explain why they have been leaving.
It all suggests that things aren’t as easy as today’s £500m share buyback might imply. There’s also the matter of a £110m credit impairment charge in the investment bank, the reason for which is not clear.
Performance of Barclays’ Corporate and Investment bank:
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