- Barclays boss's memo urges bankers to meet more with clients
- Deutsche Bank, Standard Chartered also reducing senior roles
Barclays Plc Chairman John McFarlane wants to change the way his bankers spend their days. In: revenue-generating time with clients. Out: internal committee meetings with colleagues.
Staff should meet with customers rather than sit “in endless internal meetings,” McFarlane wrote in a memo to employees. “We need to instill a high performance ethic, with personal accountability, reduced unnecessary bureaucracy, spending less time internally and more externally,” McFarlane wrote.
McFarlane is rejigging a bank whose revenue fell 9 percent to 25.3 billion pounds ($38.9 billion) in 2014 in an effort to boost returns for shareholders. While also exiting businesses that are no longer profitable, cutting jobs and replacing staff with machines, Europe’s largest banks are hacking away at excess bureaucracy they built up in the boom years. Extra layers added to meet tougher regulations in the wake of the financial crisis have complicated that task further.
Deutsche Bank AG, Germany’s largest lender, is looking to abolish its 19-member group executive committee, which advises the management board led by co-CEOs John Cryan and Juergen Fitschen, a person familiar with the matter said last month.
Cryan wrote in a letter to staff on his first day in the job that the bank had become “slow and cumbersome” as it seeks to impose higher standards of behavior across its operations.
“We have become inward-looking and bureaucratic,” Cryan wrote. “Our confidence to engage with the outside world has been dented. We must wean ourselves off the proliferation of committees. A colleague recently told me that it took nine months to interview and hire someone -- this can no longer happen.”
The move to cut excess bureaucracy comes as regulators seek to impose tougher capital rules on banks, denting profitability. Cutting costs is one way for lenders to maintain returns to investors as revenues fall.
“It’s all about costs,” said Edward Firth, head of European bank research at Macquarie Group Ltd. in London. “We’re going through a centralization stage right now, taking out layers and making decisions in the center. Lots of banks got far too diverse and disconnected from the priorities of shareholders and they’re looking to reverse that.”
At Standard Chartered Plc, the emerging markets-focused lender is said to be considering cutting a quarter of its senior banking positions, amounting to as many as 250 of 1,000 managing directors. In July, CEO Bill Winters stripped his deputy Mike Rees of powers in a push to gain more direct control and speed up cost cuts as part of a wider management structure overhaul.
Winters, 53, who replaced Peter Sands after the former CEO failed to reverse a decline in earnings and a slump in shares, appointed a 13-member management team reporting directly to him. Before the overhaul, the lender had two regional chief executives, Viswanathan Shankar and Jaspal Bindra, who have left the bank, while all heads of products reported to Rees.
“The group needs to kick-start performance, reduce its cost base and bureaucracy, improve accountability and speed up decision making,” Winters said at the time of the changes.