Local Competition forces Barclays to cut 600 jobs in India

Barclays India will slash up to 600 positions by March next year as it cuts down on its lending activities, bank sources said. This, however will not translate into an equal number of job losses as some of them will get accommodated within the company, apart from natural attritions over a nine-month period when the process is to be carried out, they added.

Around 400 of the positions will be cut in its consumer banking division while the same at its non-banking finance arm will be up to 220, sources who did not want to be identified said. When contacted, a Barclays India spokesperson said, “we continue to progress (in the planned restructuring) in line with the announcements made back last December.” The bank had last December announced a restructuring of its operations, as part of the global cost cutting, under which it would take a year-long programme of withdrawing from retail lending in the country.

[caption id=“attachment_353533” align=“alignleft” width=“380” caption=“Barclays India has just nine branches and 40 ATMs. Reuters”]  [/caption]

The process, which is supposed to be over by the end of this year, is likely to get prolonged, the sources said, adding all the role cuts are a part of the same process.

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June will alone result in around 30 jobs being culled at the banking division, which when translated into a year-long process, comes to around 350 job losses out of the 400 roles identified to be trimmed, they said.

According to the sources, it is executives in the lending side like sales force, collection and support functions like risk officers, who stand to get affected in the process.

Last July, Barclays had said it was winding up its mid-corporates division here as cross selling of investment banking and normal banking did not develop as expected and would sharpen its focus on serving the needs of large corporates, MNCs and FIs apart from investment banking.

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The move also involved revamping its corporate finance business by merging the coverage teams of Barclays Commercial Banking and Barclays Capital under the investment banking arm.

“This revamp is being done the basis of strategic business imperatives and closer alignment to our global business lines,” the Hong Kong-based Barclays Capital Asia managing director for investment banking Helge Weiner-Trapness had said. The recast also involved winding up of its SME division and post-wind up, the bank would be sharpening its focus on lending to large corporates, MNCs.

The second part of the recast process was the revamp of its corporate finance business by merging the client relations team of Barclays Commercial Banking and Barclays Capital and the resultant retrenchment of some 25 people.

The move to shut down SME division stemmed from the fact that Barclays was facing stiff competition from homegrown lenders like HDFC Bank, Kotak Bank and Yes Bank in this segment. According to an RBI report, Barclays’ bad loans at Rs 1,422 crore were the second highest among foreign banks in the country just behind Rs 1,683 crore of HSBC in 2010. Barclays’ non-priority sectors like credit cards and personal loans accounted for 91.3 percent or Rs 1,298 crore of bad loans. There were also reports that Barclays is in talks for a possible sale of its SME business.

Barclays Corporate includes its NBFC launched in March 2008 called Barclays Finance. It currently has over 50 distribution points. The bank has 2,000 commercial clients including large corporates, small and medium enterprises and companies looking to grow overseas. As of March 2010, the bank’s outstanding loans were at Rs 7,600 crore against Rs 10,600 crore in the previous year.

In FY10, Barclays had loss of Rs 550 crore, against a net profit of Rs 30 crore in FY09. As of March'11, gross NPAs were at Rs 781 crore, which is a major drop from FY10 when its bad loans stood at Rs 1,400 crore. Barclays India has just nine branches and 40 ATMs.

PTI