Barclays Mulls Slashing Office Footprint In The UK And The US
UK – Multinational financial firm Barclays is considering to slash its office rental expenses in the United States, the UK, and India, as the prevalence of working from home fuels its cost-reduction plans, reported Bloomberg on Friday (11 December).
According to insiders, who requested anonymity, the company may announce changes by early-2021, but its board has not yet made a final decision on the extent of cost-cutting and when the measures will be implemented. One initiative being mulled is a further reduction in its UK branches, which it was already considering prior to the health crisis.
In late October, Barclays’ Finance Director Tushar Morzaria said “we probably have more real estate in London than I think we would ideally like, and I’m talking about head office or large buildings. Depending again on how the pandemic goes and how working behaviour goes, we may have too much in Manhattan as well.” These comments were previously unreported.
During an earnings call in October, the financial firm’s CEO Jes Staley revealed that they are evaluating “actions to reduce structural costs,” but the details have yet to be determined. During an early period of the COVID-19 pandemic, he said that office space constructed for thousands of employees could become a “thing of the past.” However, he retracted it and said later that it’s vital to eventually return to the office.
The company’s HQ is located within a 32-storey office tower in Canary Wharf, the financial centre in east London, where it relocated after staying for around 3 centuries in the City. Its corporate and investment division, which accounts for a large chunk of its revenue, is housed in a nearby commercial property.
Over at New York, Barclays is considering to transfer its traders and investment bankers to Hudson Yards, meaning it could vacate its office space in the Big Apple that was acquired from the Lehman Brothers during the 2008 Global Financial Crisis. The bank also has a significant presence in New Jersey, several cities across Britain, and in India.
“We’ll be thoughtful and deliberate about what we need to do and when we need to do it,” noted Morzaria.
The firm’s branches in the United Kingdom have been getting fewer in recent years and that trend is expected to continue. Still, Staley said that executives “recognize the importance, particularly when we’re the last branch in a town” and they’ll deal appropriately with that.
Roughly three-quarters of the bank’s 80,000-strong workforce have been performing their roles from home since COVID-19 spread across Europe in early-2020.
Barclays isn’t the only financial firm attempting to reduce office rental costs amidst a time of lower profitability. Lloyds Banking Group is also relooking its real estate strategy after remote working became more popular due to the health crisis, said its Chief Executive Antonio Horta-Osorio.