25th May 2020

Environment Barclays warns pandemic could cost it £2.1bn

Environment Barclays warns pandemic could cost it £2.1bn

Environment

environment Barclays BankImage copyright
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Having thousands of bank workers in big, expensive city offices “may be a thing of the past”, Barclays boss Jes Staley has said.

About 70,000 of Barclays’ staff worldwide are working from home due to coronavirus lockdown measures.

This had led to a rethink of the bank’s long term “location strategy”, Mr Staley said.

It came as Barclays warned the pandemic could cost it some £2.1bn due to customers being unable to repay loans.

In recent years, banks worldwide have shifted staff away from expensive skyscrapers in financial hubs, but Barclays and its rivals still have busy offices in places such as London’s Canary Wharf.

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Boss Jes Staley said he was “sure” the bank had made mistakes over the emergency loans scheme

But Mr Staley said his bank was re-evaluating how much office space it needed, as it was now being run by staff working “from their kitchens”.

He added that in the future retail branches could be used by investment banking and call centre workers, hinting at an end to long commutes for some workers.

“There will be a long-term adjustment to our location strategy,” Mr Staley told reporters. “The notion of putting 7,000 people in the building may be a thing of the past.”

Environment ‘What about Pret?’

Neil Wilson, chief market analyst at Markets.com, said remote working would help banks like Barclays cut their costs.

But he said that if big City offices, call centres and branches closed there would be knock-on effects on surrounding businesses.

“What about the Pret [a Manger] or the pub that depends on lunch trade from the City workers filling up these offices every day? The impact on the economy will be permanent.”

Barclays did not say when its offices and branches would reopen, but indicated sites in Hong Kong would be first, followed by Singapore and Tokyo, then Europe, with social distancing measures in place.

It came as the bank reported a 38% fall in profit for the first quarter – to £913m – linked to the coronavirus pandemic.

It blamed a £2.1bn impairment charge as it set money aside to cover its “initial estimates” of the costs of the crisis.

“Given the uncertainty around the developing economic downturn and low interest rate environment, 2020 is expected to be challenging,” Mr Staley said.

Mr Staley also acknowledged Barclays may have made “mistakes” in its handling of a government loan scheme for businesses affected by the lockdown.

Many have complained it takes too long to access the cash, but Mr Staley said the the programme was “beginning to work”.

He said Barclays had already given 3,760 business loans valued at £737m, as well as granting 238,000 customers mortgage and loan payment holidays.

He added that more than six million customers and clients were currently paying no personal overdraft or business banking charges.

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