Thousands of job cuts and a drive to slash costs are prompting a number of the largest global banks based in the UK to sublet office space, close branches and sell off real estate.

In the past few weeks it has emerged that a number of banking groups are developing plans to sublet thousands of square feet in Canary Wharf office space as jobs are axed or moved to cheaper locations.

Credit Suisse has sublet more than 300,000 sq ft of office space - that was previously let to Bank of America Merrill Lynch - to Thomson Reuters in the largest office leasing deal in the UK this year, after announcing last October that it would relocate 1,800 jobs to “less expensive centres”.

Barclays, which last month reported a net annual loss of £394m and has said it will cut 1,200 investment bank jobs, was reported by Bloomberg in the past few weeks to be in talks to sublet 300,000 sq ft in Canary Wharf, London, to a division of the UK government.

The ongoing cull of jobs in the UK is reducing the need for banks to hold such large offices, especially in the expensive capital, at a time when costs and profits are coming under pressure.

Jes Staley, Barclays chief executive, said last month that the bank has not reduced its real estate footprint since the crisis and that there are “tremendous savings” for the lender to do so.

He said: “We want to make sure that we have the earnings coming forward that allow us to make statements around our real estate which has significant savings and we’ll get that done in 2016”.

Royal Bank of Scotland, which reported its eighth successive net annual loss five weeks ago, has since made 1,600 job cuts. The state-backed lender is removing 450 positions in its UK-based investment banking arm and is creating 300 similar but lower-cost roles in India.

Indeed banks are shifting more jobs outside of London into regional “hotspots”. A report by the British Bankers’ Association last year showed that regional growth in banking jobs has surpassed London. Among them was Tunbridge Wells in Kent, which experienced a 1,016 per cent increase in banking employment last year.

Banks’ total office footprint in London now stands at its lowest since 2000, at 19.5m sq ft, according to data from the estate agency Cushman & Wakefield.

Chris Lewis, head of occupier advisory at Deloitte Real Estate, said this is partly because of the financial crisis, regulatory change, and an efficiency drive.

“A number of the big banks over the past five years have automated, outsourced or [moved to other locations] functions that traditionally would have been held in-house,” he said.

The shift to automate processes and offer digital services is set to exacerbate the decline in headcount and the need to sell off office space. A report last week by Citigroup forecast that the growth of fintech will spur almost 2m banking job cuts over the next decade.

Some banks are attempting to embrace the move to digital, while utilising branch space and offices that might otherwise be sold.

Barclays is launching its Eagle Labs, a space for local businesses and communities to collaborate and use technical equipment, in a number of old branches.

Ashok Vaswani, chief executive of Barclays UK, told the Financial Times: “Not only does this benefit the vibrancy of the High Street, it will hopefully also make our physical estate more viable for the future and underpin the growth of the UK’s digital economy.”

Other banks are closing branches as fewer customers visit and as more services such as advice are automated and shifted to online and mobile.

Research by consultancy group CACI shows that current account customers visited their branch 427m times last year, less than half the 895m logins on a mobile app. The group forecasts that the number of branch visits is expected to fall to 268m by 2020, while mobile app usage is on track to reach 2.3bn logins.

RBS is poised to close at least 50 branches over the coming weeks, according to people familiar with the situation. The bank cut 550 advice jobs last month as it moves to provide “robo-advice” online, as a lower-cost way to provide investment expertise to thousands of people with small savings pots.

However, the move to reduce networks threatens to leave a number of communities without a branch, leaving customers alienated. Some 179 branch closures have been announced so far this year, of which 48 are the last bank to have remained in town.

Derek French, head of the campaign for community banking, said that demand for digital “should not have surprised the big banks”.

In spite of the growing use of mobile services, the closure of branches is part of a broader cost-cutting push being employed by the banks, in a low-interest rate environment in which income is coming under pressure.

Some senior bankers, who wished to remain unnamed, said they are considering subletting or have contemplated it as headcount continues to reduce. The trend points to the future of UK-based banks as increasingly digital with staff based in hubs outside of the country’s capital.

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