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Barclays is exploring a plan to drop thousands of clients at its investment bank as part of a strategic overhaul that is meant to boost profits and cut £1bn of costs.

Barclays executives have met several times this year to thrash out the restructuring, codenamed Minerva after the Roman goddess of wisdom, according to people briefed on the discussions.

Chief executive CS Venkatakrishnan is under pressure to reduce Barclays’ reliance on investment banking and return more capital to investors, with a public announcement expected in February.

The company’s shares are trading close to their lowest levels since the Covid pandemic, and Barclays’ valuation is among the cheapest of any major global bank.

Barclays executives considered, but ultimately shied away from, several radical options, with the boldest proposal focused on the group raising capital to buy a wealth or asset management business.

Another involved a drastic reduction in trading assets at the investment bank of as much as 25 per cent, with the balance sheet redeployed to the consumer and credit card operations, several people familiar with the deliberations said.

However, following opposition from co-heads of trading Adeel Khan and Stephen Dainton, Venkatakrishnan is set to chart a more moderate course.

Barclays was likely to focus on cutting ties with its least profitable investment banking clients, people close to the situation said.

This could mean ending relationships with more than 2,500 customers out of a total of more than 10,000, although the people stressed no final decisions had been made. A person close to Barclays disputed the figure was that high.

The company declined to comment on the internal discussions.

Barclays’ client management system, known internally as “Hector”, ranks customers, with the top 500 or so tiered into diamond, platinum and gold bands that generate the vast majority of profits.

The rest, classed as silver, do not transact with Barclays often enough or at a sufficient scale to earn it a good return.

The investment bank is at the heart of the company’s review because it has grown over the past eight years to dominate the overall group, accounting for £219bn of risk-weighted assets (RWAs), or about two-thirds of the total.

Banks are forced by regulators to hold equity capital against RWAs. If Barclays can reduce its assets, or redeploy them into more profitable areas, it should be able to boost its shareholder returns via dividends or buybacks.

If done aggressively, trimming its less profitable investment banking clients could free up as much as £20bn of RWAs, at a cost of less than 10 per cent of revenues at the division, the people close to the matter said. However, the person close to Barclays said the final figure was likely to be lower.

The division, which also includes Barclays’ corporate business, has been told by the board to come up with a plan to generate a consistent return on tangible equity of 14 to 15 per cent, from about 11.5 per cent today, the people added.

That would require operating costs to fall sharply as a percentage of income from about 65 per cent to a mid-50s per cent ratio, according to internal estimates.

The targets would become even harder to hit when new global capital rules known as Basel 3.1 come into force.

Plans to spare the trading operation a more thorough restructuring have provoked robust debate within Barclays’ executive committee.

Executives considered exiting US municipal bond trading, which underwrites debt for state and local governments, the people close to the process said.

However, the business accounts for relatively few RWAs and so would have had little overall impact.

Other weak-performing businesses also came under scrutiny, but were likely to be retained because they were seen as crucial to Barclays’ status as a “full-service” investment bank, the people added.

One was the lossmaking cash equities operation, which includes stock trading, sales and research, but again would result in only a modest reduction in assets.

Another was the much larger securitised products trading business, which has been flagged in the review as unprofitable and balance-sheet intensive. However, it is closely intertwined with the financing side of Barclays’ securitisation business, which does make money.

More broadly, Barclays is planning to cut as many as 2,000 jobs across the group as it seeks £1bn of cost savings.

A high proportion of the job losses will come at BX, Barclays’ central hub that provides back office and technology services. The UK consumer lender will also be a target because it is far more costly to run than peers such as Lloyds and NatWest.

Barclays could also squeeze costs at its corporate business, which makes loans and provides services to large companies.

The lender was also planning to reduce its capital burden by doing more synthetic risk transfers, one person briefed on the discussions said. These have become increasingly popular among European banks wanting to reduce their capital requirements.

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