Barclays share price is at risk as it joins Citi in layoffs

Barclays (LON:BARC) share price has not done well this year as the company’s headwinds continued. It dropped from the year-to-date high of 184.15p on February 9th to a low of 128.16. It has now bounced back to 140p. It is not alone as other British banks like Lloyds, NatWest, and Standard Chartered have also dropped.

Barclays upcoming layoffs

Barclays stock price has underperformed in the past few months even as interest rates have risen and boosted its Net Interest Income (NII). Higher rates have boosted its interest income sharply higher since 2022.

However, they have also had negative implications as more savers have moved to higher-yielding assets like short-term bonds. At the same time, delinquencies have risen. In the most recent quarter, its impairment charges rose to over £0.4 billion.

Most importantly, higher rates have had a negative impact on investment banking as deals dropped. According to the Wall Street Journal, the volume of global M&A has dropped by 14% this year to over $2.5 trillion. 

Further, the debt capital market has dropped by 4% to $6 trillion while investment banking revenue has plunged by 19% to $59 billion. These numbers are notable for Barclays since it is a big player in investment banking. In its Q3, its corporate and investment banking income fell by 8% to 3.1 billion pounds.

Therefore, Barclays is joining Citigroup in announcing huge job cuts as it seeks to reduce its costs. According to Reuters, the company is seeking to shed about 2,000 employees, which will see it save $1.3 billion in annual costs. These jobs account for about 2% of the total global workforce. 

In its most recent results, Barclays said that its income rose to £6.3 billion in the third quarter while its profit before tax jumped to £1.9 billion. Its EPS improved to 8.3p while the CET1 ratio was 14%. In the announcement, the company reiterated that it was evaluating material cost cuts to help boost future demand.

While the banking sector is going through a tough period, there are signs that things are starting to improve. In the deal-making space, we have seen several M&A deals such as the acquisitions of Pioneer Natural Resources, Hess, and Hotel Chocolat. 

Also, central banks have pointed to peak rate hikes and analysts expect that most of them will slash rates in 2024.

Barclays share price forecast

BARC chart by TradingView

Turning to the daily chart, we see that the BARC stock price has been attempting to rebound in the past few days. This rebound has seen it retest the important support level at 142.78p, the lowest swing in June and July. This means it has formed a break and retest pattern, a sign of a bearish continuation.

The shares have moved below the 50-day and 100-day moving averages. Therefore, the outlook for the stock is bearish, with the next point to watch being the psychological point at 130p.

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