Barclays’ chief executive has revealed a plan for reviving the bank’s share price, which is currently in decline. The plan is to invest £30 billion in Britain in order to stimulate growth and deliver £10 billion to shareholders over three years.
This is a crucial moment for Coimbatore Sundararajan Venkatakrishnan. He took over the lender’s management in November 2021, and investors have been growing increasingly frustrated with the FTSE group’s low stock market value.
Venkat, the Barclays boss, has been under pressure to stop the decline of the shares.
Venkat revealed in a much-anticipated strategy update, which was released alongside Barclays’ annual results, that he would be embarking on an ambitious push to “rebalance Barclays” away from its Investment Banking division. Investors have been concerned about Barclays’ investment banking division, which has a tendency to drain capital and produce volatile earnings.
Venkat stated that Barclays would allocate £30 billion of risk-weighted asset to the UK over a three-year period. Barclays is very optimistic about the UK, both as a business location and a market from which to operate. It plans to allocate an additional £30 billion in risk-weighted asset to its home market over a three-year period.
His shake-up includes a restructuring the group, from three divisions into five, and a renewed drive to cut costs to £2 billion by 2026. Venkat’s strategy overhaul led to the elimination of 5,000 full-time jobs at Barclays last year. He refused yesterday to reveal how many jobs will be lost from the 92,400 strong workforce of Barclays.
He wants to increase the annual group revenue to £30 billion by 2026 from £25.4 in 2012, and to give investors at least £10 billion back over three years. Barclays announced a £1 billion share purchase yesterday that was larger than expected, as well as a 5.3p per share full-year dividend for 2023. Barclays’ shares rose 12 3/4p or 8.6 percent to 161 1/4p as investors praised Venkat’s plan. The bank is now valued at £24.5billion.
One City fund manager, who owns Barclays’ shares, said Venkat exceeded market expectations. “People were expecting something terrible or a damp squib.”
Barclays is known for disappointing investors through self-inflicted scandals. This includes the sudden departure of Venkat’s predecessor Jes Staley because of his ties to Jeffrey Epstein the sexual offender.
Anna Cross, Barclays finance chief, downplayed the exposure of the lender. Cross stated that “our market share in motor financing is in the single digits, and we completely exited from this business in 2019”.
Barclays’ annual results showed that its pre-tax profit had dropped by 6.5% year-on year to £6.56billion in 2023. This was due to a £927m charge for job cuts last year and other cost initiatives.
Ben Martin reports that Barclays reduced the bonus pool available to employees last year, and revealed a decline in the number of bankers who earn at least €1,000,000.
The bank announced that the bonus pot for group employees had been reduced to approximately £1,75 billion from £1,79 billion in 2022.
C. S. Venkatakrishnan was the Barclays CEO who saw his bonus cut last year. His total compensation package dropped from £5.2 billion to £4.6million. The bank’s annual report revealed that his bonus for 2023 was down to £1.4m from £1.9m in 2022. According to the lender, 668 bankers now earn €1 million a year or more.
The bank stated that it has yet to adjust its pay structures in order to reflect the City regulators’ removal of the bonus cap from last year. After Brexit, the European Union cap, which was imposed in 2014 by Brussels, has been removed in the UK.
It was generally believed that the cap had unintended consequences, such as increasing fixed salaries for financial professionals as banks tried to compensate smaller bonuses in order to retain talent.
Barclays stated that it would “consider further this in regard to 2024 and subsequent years” and added: “A fairly small number of employees are potentially affected by this regulatory change.”