Barclays BCS is cutting jobs in its Japanese fixed-income trading business, due to the unfavorable interest-rate environment in Japan. This, in turn, is lowering profits in the company’s markets unit. The bank has already terminated the services of several sales personals and traders in Tokyo. This news was reported by Bloomberg.
While Barclays remains focused on improving its corporate and investment banking division’s performance, the same is becoming all the more challenging to be achieved. This unit has been witnessing declining profits, with net income falling 4% year over year during the first half of 2019.
Thus, the latest job cuts are in sync with Barclays’ strategy to trim expenses across the globe amid challenging operating backdrop. Notably, the bank slashed 3,000 jobs in the June-end quarter. Further, Barclays is in talks to divest its New York-based automated options trading business.
Barclays has been undertaking restructuring and cost-saving initiatives for the past several years. Remarkably, this resulted in a dip in operating expenses during 2017 and 2018, with the trend continuing in the first half of 2019 as well. Also, the company expects expenses to be lower than £13.6 billion this year.
The above-mentioned initiatives will likely help boost the Barclays’ profitability. Thus, management targets to achieve return on tangible equity (ROTE) of greater than 9% in 2019.
Barclays is not the only global bank making moves to sail through the turbulent operating environment. Low or negative interest rates and most central banks’ accommodative monetary-policy stance are dampening the financial firms’ growth prospects. In the recent past, Deutsche Bank DB, Societe Generale Group SCGLY and Citigroup C also made job cuts in their trading divisions.
Shares of Barclays have lost 3.1% on the NYSE compared with the industry’s fall of 0.5%, year to date.
The stock currently carries a Zacks Rank #4 (Sell).
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