When news leaked last week that Barclays may be on the hunt for a large US retail bank, just 18 months after swallowing Lehman Brothers’ US operations, some analysts speculated that it was part of a push to rebalance the bank’s earnings.
The impact of regulatory changes on Barclays Capital, the booming but volatile investment banking division that last year contributed nearly half of group pre-tax profits, is likely to force Barclays to beef up its presence in less risky businesses, in particular the amount of liquid, retail deposits it holds, they said.
A big US acquisition would also address the problem of how Barclays will derive two-thirds of its profits from outside the investment bank “over time”, as it has repeatedly assured investors.
Given the poor record of transatlantic banking tie-ups, the fact that Barclays would seek an acquisition to diversify its revenues speaks volumes about the perceived difficulty of reducing its dependence on BarCap, analysts said.
“It’s like walking into a casino and betting everything on red,” said one senior Wall Street executive when asked to describe BarCap’s growth in recent years.
He added: “Luckily for Barclays, for now it keeps coming up red.”
BarCap’s growth amid the fallout from the financial crisis has resulted from a combination of skill and luck.
Although BarCap’s chief executive Bob Diamond and his top lieutenants may have had the foresight to build market share through high-volume, lower-margin “flow” businesses and market-leading technology, they also only narrowly missed the torpedo of taking on a much bigger chunk of Lehman’s toxic balance sheet.
Sustaining and improving BarCap’s position in more stable markets will depend less on the whims of fortune than on its ability to maintain its position in core high-volume businesses such as fixed income, and build market share in other areas such as equities and advisory work.
In 2009, 72 per cent of BarCap’s £18bn top-line income came from its so-called “FICC” business – trading liquid debt securities, swaps, currencies and commodities on behalf of clients.
That is almost five times the revenue of its equities and prime services business, and more than six times its “traditional” investment banking advisory business.
Like rivals such as Goldman Sachs and Deutsche Bank, BarCap exploited heavy demand to drive big profits.
与高盛(Goldman Sachs)和德意志银行(Deutsche Bank)等竞争对手一样，巴克莱资本利用巨大的市场需求，赚取了丰厚的利润。
BarCap insiders insist that FICC will remain at the core of their strategy, even as the market pendulum swings back towards the mergers and acquisitions and initial public offering markets.
But the acquisition of Lehman’s US operations, which had a strong equities franchise, has finally given Mr Diamond a platform to build a global equities business. He has responded by taking on hundreds of staff in Europe and Asia, led by star recruits such as Jim Renwick, formerly of UBS.
In investment banking, BarCap has taken on Tom King, one of Citigroup’s top rainmakers in Europe, to spearhead its push up the M&A league tables.
“It’s pretty clear where we’re focused now and that’s on building out the global equities business and building out the investment banking business,” said Rich Ricci, BarCap’s co-chief executive of corporate and investment banking.
BarCap insiders say that their biggest challenge now lies in increasing client awareness about the breadth of their capacity.
Research released yesterday by Huw van Steenis, Morgan Stanley’s chief banking analyst, shows the build-out is already bearing fruit, with BarCap taking an estimated 6 per cent share of the global equities market in the second half of 2009, against less than 3 per cent before the crisis.
摩根士丹利(Morgan Stanley)首席银行业分析师休•范斯蒂尼斯(Huw van Steenis)上周发布的研究报告显示，巴克莱资本的扩张行动已见成效。2009年下半年，该公司在全球股市中所占份额估计为6%，而危机前不足3%。
However, the group will also have to overcome regulatory challenges. The higher capital ratios and increased liquidity demanded by regulators could be partly solved by a large US retail acquisition.
Like most European banks, BarCap would be relatively unharmed by a ban on proprietary trading or investment in internal hedge funds, as has been proposed in the US, because it has relatively small positions in these areas.
Looming much larger though is the political noise, particularly in the UK, about the perceived lack of social utility in BarCap’s core activities and any sustained momentum towards “narrow” banking.
Much depends on the ability of Barclays and other integrated banks, such as Citigroup and JPMorgan Chase, to persuade regulators of the merits of the “universal banking” model by limiting any co-ordinated crackdown on high-risk activities or forced segregation of their operations.
Barclays is committed to retaining BarCap and would resist any attempt to enforce a break-up.
Among senior bankers, especially on Wall Street, the consensus is that Mr Diamond’s luck will hold.
“It’s like what Napoleon said when asked if he preferred courageous generals or brilliant ones,” notes one. “He said give me lucky ones.”