Barclays to scale down India operations, more than 600 jobs might be cut


British lender Barclays, which has been through a few rounds of downsizing since 2008, is said to be further scaling down its operations in India. As part of a larger rethink over its business approach in the region, this time the focus is on the retail segment which has ceased to be a core area for the bank.

Until recently Barclays had said that it would continue its retail business in India. But two people familiar with the development, who did not wish to be identified, said that the bank will reduce its retail team which includes a large number of sales jobs and focus instead on corporate and wealth management.

Line managers have been told about the proposed downsizing but an exact number has not been finalized yet, one source said. The final number retained could be anywhere in the region of 300, against 978 employees at present. The worst affected could be business development and customer service departments. When contacted by TOI, the bank did not offer any comments on its retail plans.

"What to do with the retail business in India has been a constant area of management debate over the last couple of years," a person aware of the development said. The Indian retail business has been thrown around among different global groups and is currently being looked after the Global Investment Banking division. About a year ago, the Global Retail and Corporate Banking division (GRCB) was split into two and since the Global Retail Banking division did not want to deal with the Indian retail business because of its lack of interest in the relatively small and weak loan portfolio, it was housed under the Global Corporate Banking division.

Subsequently, in July the bank merged its investment banking and corporate finance team after it restructured its global retail and commercial division. Following the merger, which resulted in job losses, the ownership of retail shifted to the investment banking division.

Barclays' problem lies with the timing of its India expansion. The surge happened just before the global crisis of 2008 and its retail lending took a hit. It never really recovered from that and there has been a substantial write down in its loan portfolio over the last two years.

As part of its restructuring effort, the bank moved out of the SME business to focus instead on corporates. Recently, it also put its credit card portfolio in India on the block. According to Reuters, Standard Chartered Bank will pay less than half the book value of the 1.7 lakh Barclays credit cards, which is estimated at Rs 180 crore.

The bank had launched its consumer banking division in May 2007 targeting mass affluent customers with products such as unsecured loans, cash management investment products and insurance. According to RBI data, Barclays Bank has nine offices in India as on March 2010. But the bank numbers represent only a portion of the bank's business in India. The group has a couple of non-bank finance companies whose numbers are not in the public domain.

Long before commencing retail banking, the group was present for almost three decades through Barclays Capital. In March 2008, the group had launched Barclays Finance-a non banking finance company, to support its corporate footprint in the country.

The move comes at a time when the bank is restructuring its capital internationally by buying back $3.9billion of debt to improve the quality of capital it holds and to have better capital profile under the new capital adequacy guidelines as decided by central bankers worldwide.

Source: Times of India