Slowdown in Chinese economy and tumbling crude prices have started taking toll on several global banks’ Asian operations. While some are planning to trim workforce, others, like London-based Barclays PLC BCS, is mulling over closing certain Asian businesses along with job cuts in other divisions.
Per Bloomberg and Reuters, Barclays is planning to shut down majority of its cash equity business in the region, while intending to slash workforce in the investment banking unit. Further, the bank aims to shutter its investment-banking businesses in South Korea and Taiwan.
These are part of CEO Jes Staley’s strategy to reduce cost and enhance overall profitability. According to 2014 annual report, the company’s Asia Pacific business generated roughly 3% of total revenue.
The global cash equity operations have been hit hard by slowdown in commodities market and continued turmoil in equity markets across the world. These have rendered cash equity businesses unprofitable. Moreover, tighter regulations, increasing competition from local players and rise in capital requirements have led banks to trim/close less profitable operations.
Barclays, through its near-exit from Asian cash equity operation, plans to slash roughly 50% of workforce. Also, the company intends to cut 30 investment banking jobs in the region as it is primarily focusing on its investment banking business in North America and UK.
Additionally, as per Reuters report published in Dec 2015, Barclays is weighing its options regarding the sale of its Asian wealth management operation, though nothing concrete has come up. Notably, DBS Group Holdings and Julius Baer were seen as potential bidders for the unit, which is valued at about $600 million.
Nonetheless, as we mentioned earlier, Barclays is not the only one looking to cut Asian exposure. Many global banks including Citigroup Inc. C, Morgan Stanley MS, Standard Chartered Plc and Nomura Holdings, Inc. NMR have already trimmed/closed their Asian operations or plan to do so in the near future.
For Barclays, this is expected to be a step in right direction for enhancing profitability. The company has sold/closed many of its global operations.
Currently, Barclays carries a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment