Barclays pushes to shrink investment bank
Barclays plans to accelerate the shrinkage of its investment bank by exiting trading operations in continental Europe, Asia and Latin America in a plan supported by incoming chief executive Jes Staley, according to two people familiar with the strategy.
Mr Staley, the former head of JPMorgan Chase’s investment bank, is expected to take over early next year, though he is still awaiting regulatory approval.
Some investors and politicians have interpreted the veteran American financier’s impending arrival as a sign that Barclays is preparing a bullish strategic shift to rebuild its investment bank.
However, people familiar with the bank’s strategy said the 58-year-old had already backed the plan to refocus Barclays’ trading operations on its core US and UK markets, with smaller presences in South Africa, Japan and one other Asian centre.
“He will be quite economically rational,” said a person familiar with Mr Staley’s thinking. “His orientation is to focus on New York and London, the main financial centres, and [almost] everything else will be representative offices.”
The retrenchment will mostly hit trading and securities operations in countries including Singapore, Hong Kong, India, Russia, France, Italy, Spain, Brazil and Mexico. Barclays declined to comment.
News of Mr Staley’s planned arrival from hedge fund BlueMountain Capital has lifted spirits in Barclays’ US investment bank, which was built on the acquisition of Lehman Brothers’ American operation but which has suffered several big name defections in recent years.
“It’d be great to have a CEO,” said a US banker at Barclays. “We’d obviously be delighted to have someone with an investment banking background and strong understanding of an investment bank.”
Antony Jenkins, who was fired after three years as chief executive in July, took two shots at restructuring the investment bank, promising to cut a quarter of the unit’s 28,000 jobs and shrink its share of group capital from half to a third.
Mr Staley has seen first-hand how UBS won plaudits from investors for slashing the capital-intensive trading operations of its investment bank even more aggressively. He joined the Swiss bank’s board earlier this year, but will step down if he is approved to join Barclays.
“He has got used to the capital-light model of investment banking and is quite admiring of the UBS model,” said the person familiar with Mr Staley’s thinking.”
Meanwhile, Barclays has been approached with an offer for its Italian retail banking network by Mediobanca, the Milan-based investment bank.