Barclays engages McKinsey to help optimise investment banking division
Over the last six months, McKinsey & Company consultants have been looking into the investment banking division of Barclays. Part of a new strategy presented in early 2024, the financial services giant ultimately hopes to save £2 billion across its operations by next year.
The UK banking scene has been undergoing a period of transformation in recent years. Banking giant HSBC has been slashing jobs across its investment bank division as part of Chief Executive Georges Elhedery’s overhaul on the lender, for example.
In February 2024, Barclays Chief Executive C.S Venkatakrishnan laid out the company’s own savings strategy. Aiming to save near £2 billion across the bank by 2026, the FTSE 100 bank is looking to simplify its investment bank, with consultants examining the front office, finance, risk and technology divisions.
In order to deliver on that, sources close to the story have told business news site Bloomberg that McKinsey & Company personnel have been drafted in to help form a plan. Over the last six months, the consultants have been examining front office, finance, risk, and technology activities.
According to Bloomberg’s report, the team are looking at "work duplication and the possibility of automating tasks". Sources familiar to the matter said that this had led to the banking group eyeing axing 200 investment banking jobs, in a bid to "increase returns" for the company.
The investment division's revenues rose 16% in the first quarter, exceeding £3.9 billion. This droved a £2.7 billion pre-tax profit for the quarter, ahead of the £2.5 billion pencilled in by analysts. But much of this was driven by higher transactional activity in global markets, after numerous share sell-offs ahead of President Donald Trump’s sweeping tariffs on the US’ trading partners.
With this not being seen as a trend which will continue, Barclays looks to be cashing out, ditching parts of its business across UK, the US and Europe while it hones in on a fresh growth strategy across Asia. Barclays commented to that end that the news was “in line with the strategy we announced in February of 2024,” and that the firm remains focused on “simplifying our processes to better serve our clients.”
The world’s largest governments and corporations often consult with the largest strategy firms when undergoing major changes – so this was by no means the first time Barclays has turned to an MBB firm for help. In 2023, for example, Barclays hired Boston Consulting Group to review its internal operations strategy – something which also focused on part of its investment banking business: relating to wealth and retail management.
