Finance Magnates learned today that Barclays has agreed to sublet office space in London’s Canary Wharf to the UK’s Cabinet Office as part of its continued strategy to reduce costs. The move will save the bank around £35 million ($45 million) a year.
According to a statement on Barclays’ website, the cabinet will lease the 540,000 square foot site in Canary Wharf, where Barclays currently occupies two additional buildings – the bank’s global headquarters at 1 Churchill Place and 5 North Colonnade.
Barclays occupies two leases on the site, both of which are due to expire in 2032. It is anticipated that the handover of the building will be completed by the end of 2017.
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IT and human resources staff formerly in the building will be relocated to Barclays’s headquarters at 1 Churchill Place or the investment bank office which is situated in the same area. No employees will lose their job as a result of this announcement.
Chief Executive Officer Jes Staley has said Barclays can make “tremendous savings” by reducing the amount of real estate it owns and leases, with headcount set to fall by a net 17,000 this year.
Barclays’s move could be the first among a series of real-estate reduction programs in London as European banks seek to cut fixed costs and improve profitability, according to Bloomberg Intelligence analyst Jonathan Tyce.
He said: “The impact of technology, as well as relocation risks heightened by Brexit and passporting concerns, point to further structural cost reductions that could involve significant real-estate retrenchment.”
This is not the first time that the cost-pressured bank has sought to reduce the amount of real estate it owns. Earlier this year the bank announced it was cutting back on office space in Roppongi following a round of Tokyo job cuts as part of its strategy to restore profitability amid lower revenues and higher costs.