We believe that cost is the strategic battleground for our industry.
Our cost reduction plan is working. At our Q1 2014 results we reported the lowest level of quarterly expenses, excluding restructuring charges, since 2009. We will now go significantly further.
We are revising cost guidance for 2014 Group operating expense to around £17bn, down from our earlier target of £17.5bn. We are also now establishing a 2016 cost objective for the Core bank of less that £14.5bn. The changes we are announcing today will require another £800m of cost to achieve (CTA) to 2016, but will pay back rapidly.
There will also be significant headcount reductions associated with our plans. Specifically, our plans for the Investment Bank will result in gross headcount reductions of around 7,000 to 2016. We have also revised our overall 2014 Group gross headcount reduction from 10-12,000 to around 14,000.
These changes will be challenging for colleagues. We will be clear and open with affected colleagues about the impact of our plans and we will treat them with care and respect.
What management neglected to mention is that cost is the battleground of most industries, and that it is poor management that often causes deep cuts.
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