Barclays Unveils Reorganization Plan, Targets £10B in Shareholder Returns

Barclays announces a three-year plan to split into five divisions, aiming to cut £2 billion in costs and deliver £10 billion in shareholder returns.

Barclays, a major player in the banking industry, has unveiled a new strategy aimed at enhancing its performance and accountability. The bank announced a reorganization plan that will divide Barclays into five distinct operating divisions: its U.K. retail business, U.K. corporate bank, investment bank, U.S. consumer bank, and private bank and wealth management. This move is expected to provide a more detailed breakdown of each division's performance and increase operational and management transparency.

The decision to restructure comes on the heels of Barclays reporting a 6% decline in annual profit, totaling £6.6 billion. The decrease in profit was attributed in part to higher charges for potential bad loans, which impacted the bank's earnings. In 2023, Barclays recorded £1.9 billion in credit impairment charges, compared to £1.2 billion in the previous year. Additionally, the bank recently announced a reduction of approximately 5,000 jobs in 2022.

Barclays' reorganization mirrors a similar move by Citi, another prominent Wall Street bank, which also implemented a five-silo structure in a strategic overhaul last September. Despite the challenges faced, Barclays maintained a strong common equity ratio of 13.8%, allowing it to distribute £3 billion in total capital to shareholders in 2023, marking a 37% increase from the previous year. The bank has set ambitious targets, aiming for a return on common equity exceeding 10% this year and surpassing 12% by 2026.

Barclays' strategic reorganization underscores its commitment to improving performance, transparency, and accountability across its various business divisions. By implementing a more detailed operational structure, the bank aims to enhance its financial stability and deliver sustainable growth in the years ahead.