New service unit for Barclays
• Bank to separate operations and overhaul back-office functions to comply with Britain’s new ring-fencing rules
Barclays is about to overhaul its back-office operations under a restructuring to help it comply with new postcrisis rules forcing British banks to ring-fence their retail operations from their riskier business.
Barclays is about to overhaul its back-office operations under a restructuring to help it comply with new post-crisis rules forcing British banks to ring-fence their retail operations from their riskier business.
The bank said it had formed a new company that would operate as a stand-alone unit providing support services to its two main operations — retail and investment banking — when they were formally separated.
The ring-fencing rules seek to avoid a repeat of the 2008 crisis, when banks’ bad bets threatened depositors’ cash.
While Barclays was not among those that needed a bailout, the new rules apply to all lenders in Britain that have retail and commercial or investment banking activities.
Sources involved in the project said the aim at Barclays was for critical support functions to continue operating smoothly if either of its two main businesses were to run into trouble, while also keeping costs down by not having several separate backoffice units.
The overhaul — including the creation of the new company known internally as ServCo — will affect most of the more than 10,000 people who work in Barclays back-office operations in 17 countries.
It will group together the bank’s large operations in India and SA that provide technology support and data management, along with functions such as regulatory compliance, corporate relations, legal affairs and human resources.
While for some staff this would simply involve a change in the name of the legal entity they worked for, the sources said it was likely to lead to some job losses.
Barclays declined to comment on the possible staff cuts or the cost of the restructuring.
However, sources with direct knowledge of the project said it would soak up much of the £1bn Barclays has said it would cost to comply with the ring-fencing rules.
UPHEAVAL
The structural change shows the upheaval British banks face to meet the rules that come into force in 2019.
Other British lenders are working on similar models. HSBC transferred 18,000 employees to a UK-based service company in 2015, according to a company filing, as part of a move to insulate its back-office functions to comply with the new regulations.
HSBC plans to base its ringfenced British retail and commercial banking business in Birmingham, shifting about 1,000 staff to the central English city from London. Barclays, however, will keep both main operations headquartered at its building in the capital’s Canary Wharf district.
Barclays chief operating officer Paul Compton is overseeing the creation of the new company, which will formally be called Barclays Services.
“From the outset, we’ve been keen to use the incoming ringfencing regulations to enhance the banking experience for our customers and clients, and the establishment of the service company is a great example of how we can put this into practice,” Compton said. He declined to comment on how many people will work in the new unit.
Some back-office workers were confused about which entity they would end up working for, two of the sources said.
ServCo’s management structure will be formalised by April with a view to it beginning operations by September, the sources added.
Compton joined the bank in May 2016, one of many highprofile former JPMorgan bankers recruited by Barclays CE Jes Staley.