The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
Because of Russell's stupidity and clumsiness, his teacher, was always yelling at him, "You're driving me crazy Russell!"
One day, Russell's mother came to school to check on how he was doing The teacher told his mother honestly, that her son was simply a disaster, getting very low marks, and that she had never seen such a stupid boy in her entire teaching career.
The mother was so shocked at the feedback that she withdrew her son from school and moved out of London, and relocated to Birmingham.
Twenty-five years later, the teacher was diagnosed with an almost incurable cardiac disease.
All the doctors strongly advised her to have open heart surgery, but there was only one surgeon in Britain who could perform the operation and he was located at the Birmingham Clinic. Left with no other options, the teacher decided to have the operation, which was successful.
When she came round after surgery she saw a handsome young doctor smiling down at her.
She wanted to thank him, but could not talk.
Her face started to turn blue, she raised her hand, trying to tell him something but quickly died.
The doctor was shocked, wondering what could possibly have gone wrong so suddenly.
Then he turned around and saw that Russell, a janitor in the Clinic, had unplugged the life-support equipment in order to connect his vacuum cleaner.
If you thought for one moment that Russell had become a heart-surgeon, there is a high likelihood that you think Jeremy Corbyn may be the next prime minister.
The principal reason for the high turnover of CEOs has been a continuous series of scandals. As we know, whenever there is a big scandal, the media and politicians call for someone’s head, and in Barclay’s case, that’s been the CEO. Even the current CEO, Jes Staley, has been lucky to survive several scandals. As you’d expect, every CEO has had his own vision for Barclays and has set about making it happen, only to be replaced before he gets the job done. The new guy has then come in and taken the bank in a different direction.
While there are no guarantees the present CEO will be around for the long-term, the hope is that the Board of Directors understands that the share price has been hampered by the lack of continuity, so will endeavour to create more stable leadership.
Even if it has yet to be rewarded, the new strategy for Barclays seems a lot less complicated. A focus on transatlantic operations will be much easier to understand and manage.
We’ve noted that Barclays is now taking a leaf out of Lloyd’s book and continuously using the words simple and straightforward. I don’t think Barclays will ever be a simple as Lloyds, but nor should it try to be. It’s got a better spread of assets and products. You can’t be simple and diversified at the same time.
Lloyds Bank (LLOY) Yield 6.19%
Lloyds is back to doing what it does best – current accounts, mortgages, personal and business loans, life insurance...sound dull? Thank goodness.
Fund managers in the City used to mockingly call Lloyds “the world’s most boring bank”, who knew that would become a compliment. It’s taken many years for Lloyds to recover from the financial crisis, not only financially, but also on a reputational level.
As we know, Lloyds made a near fatal error when it bought HBOS in the thick of the fog back in 2008. In the four years that followed, the HBOS side of the business would incur a mammoth £45 billion of loan impairments in addition to £10 billion from the Lloyds side.
It was enough to bring any financial institution to its knees and Lloyds was forced into a £20 billion government bailout.
The UKs First ‘Superbank’
Bailout aside, the purchase of HBOS propelled Lloyds to become the UK’s first ‘super bank’.
Bear in mind, if the acquisition had taken place in ordinary times, such a major move would have faced tremendous opposition and likely to have been blocked altogether by competition regulators. Together, the two banks had relationships with four out of ten consumers.
The timing of the deal was terrible, but the cost savings have been tremendous. The initial aim was to achieve a target of £1 billion of annual cost savings, but it wasn’t long before this was revised up to £1.5 billion, then to over £2 billion.
Road to Recovery
Lloyds continues to make progress with a strong start to the Group’s latest strategic plan and the planned integration of Zurich and MBNA and launch of Lloyds Bank Corporate Markets all
Barclays vs Lloyds 02
www.atlanticmarkets.co.uk
APR 2019
Barclays vs Lloyds
Barclays and Lloyds are the key banks in the UK sector and despite some similarities there is also glaring differences. I often get asked by clients,
which is the better of the two? One is the “boring” but steady and the other is “exciting”,but can also be unstable. In this report I have looked at the pair and drawn up some key comparisons. Both have caused investors huge frustrations over recent years but both for very different reasons.
Barclays Plc (BARC) Yield 4.32%
Identity Crisis
There’s no doubting that Barclays has some great businesses when you scratch the surface.
It is of course one of the UK’s big four banks with over 23 million customers. It’s also the UK’s leading issuer of credit cards, the leading stockbroker, a leading wealth manager and has a leading investment bank.
It is fair to say that Barclays is not the global bank it once was. With the exception of the US, it has largely retreated from foreign markets. Only a few years ago it had major operations in Europe and Africa in particular, but these have been sold off.
What we have left is a UK-US focused bank. Expansion is no longer the name of the game. Today it’s all about profits and dividends.
Prized Asset
One thing that sets Barclays apart from the UK’s other big four banks is its large and sometimes successful investment bank.
Investment banking is seen as the riskier but more lucrative cousin of retail banking. Instead of mortgages and current accounts, it involves things like advice on takeovers, raising debt and equity for large corporations and trading of bonds and shares.
Barclays is the only British bank to make serious headway in investment banking, boosted by its opportunistic buy of Lehman Brothers core business during the financial crisis. This gave Barclays a leg up to compete with Wall Street’s titans such as Goldman Sachs and Morgan Stanley.
Becoming a major player has not come easy or cheap, so it’s understandable why Barclays is reluctant to part with one of its best assets, even if it is unfashionable. While investment banking adds extra volatility to earnings it can also generate mega-money in good times – on a scale that retail banking can never do. While investment banking adds extra volatility to earnings it can also generate mega-money in good times, on a scale that retail banking can never do. And those worried about another financial crisis should note that Barclays has been the first of the major British banks to successfully ring-fence its UK retail operations.
The Revolving Door
Shareholders like stable leadership and a clear strategy, which is fair enough, but in the last decade, Barclays has provided neither.
Barclays vs Lloyds 01
Since 2011, Barclays has had four different CEOs.
The principal reason for the high turnover of CEOs has been a continuous series of scandals. As we know,
Our position today
Barclays is now through the period of necessary restructuring and the significant associated costs. Our diversified business is stable and well positioned for current and future market conditions, and we have a seasoned management team delivering improving performance and returns. With the costs of restructuring behind us, we are beginning to generate improved and sustainable returns and distribute excess capital to shareholders. The quality of our earnings is the result of a deliberate choice to maintain diversity in our revenue streams, based on an understanding of structural changes in our sector, and the need to weather cyclical economic forces.
Today, we are on track to reach our RoTE, Capital and Cost targets for 2019 and beyond. Excluding litigation and conduct, in 2018 our Group RoTE was 8.5% and our earnings per share (EPS) have grown from 3.8p in 2014 to 21.9p in 2018. Our 2018 at 13.2% our CET1 ratio was at our target of around 13%. Costs were within our guidance range of £13.6-13.9bn.
Through our creation of Barclays Execution Services (BX) with its lower operating costs, we are able to increase our investment in key areas including technology, security and controls, while simultaneously reducing our costs and our cost to income ratio. As our overriding priority for 2019 and 2020 is the attainment of our returns targets, we are also able to flex our investment to a degree to support our RoTE targets if the environment requires us to do so.
Returning capital to shareholders continues to be a priority for us and we will pay a dividend for 2018 of 6.5p, which is more than double the amount paid in 2016 and 2017.
It is our firm intent to return a greater proportion of our earnings to shareholders over time, and we believe that the effective application of our strategy is critical to achieving this.
Barclays Lifts Holding In Atlas Mara To Nearly 6% From Below Threshold (ALLISS)
from Alliance News | 3rd June 2019 18:24
Atlas Mara Ltd on Monday said Barclays PLC upped its holding in the banking company following a transaction on May 23.
The FTSE 100-listed bank increased its stake to 5.7% from below the notifiable level.
Atlas Mara was founded by former Barclays Chief Executive Officer Bob Diamond. Diamond recently stepped back from his chair role at Atlas Mara to take up a non-executive director position the African banking investor.
Atlas Mara shares closed down 1.65 in London on Monday at USD1.55 each, while Barclays shares ended the day up 0.1% at 149.48 pence each.
Investors also want to see Staley's talk of progress better reflected in its share price, which has fallen 30 percent since he took the top job in December 2015.
Despite this slump, Barclays has been the second-best performer among European investment banks since Staley's arrival.
"We've still got a way to go to get to the returns we should be generating, and I want to more directly support that effort," Staley said of the demands ahead.
Barclays wants to grow its Asian headcount in the markets business by 10-11%, or around 60 people, over the next two to three years, Dainton said, adding that in the medium term Asia could deliver between 15-20% of the group's total revenues, up from 10% now.
But it is sidestepping the Asia cash equities business it closed in 2016 and hiring in other trading businesses that play more to Barclays' traditional strengths.
These include emerging markets-focused business in Singapore, its Hong Kong-based credit trading desk, foreign exchange, and electronic trading capabilities.
"It's critically important for us that we have good connectivity across the three financial centers, Europe, U.S. and Asia," Kristen Macleod, managing director of Barclays' forex sales business in New York, said.
"The markets business has outperformed our U.S. peers for six consecutive quarters …. we are one of the few banks on the street right now that are investing and growing this business."
'MISSION CRITICAL'
Insiders say they like Staley's hands-to-the-pump attitude, sharing anecdotes of him pitching clients and jumping on aeroplanes to seal deals and poach talent from other banks.
But as demands of the investment bank grow, Staley is relying on the likes of McGrath, Dainton and his inner circle to quell calls he might be neglecting other parts of the bank.
Although fallout from last month's shake-up in the investment bank's pay structure, tying bonus payouts to profits generated in a given time period, could tarnish Barclays' year, Staley's lieutenants are in no doubt what they have to do.
"The overarching theme in these ExCo meetings is that it is mission critical we drive results and generate returns for our shareholders, sooner rather than later," Macleod said.
(Reporting by Sinead Cruise and Lawrence White, Editing by Alexander Smith)
By Sinead Cruise and Lawrence White
LONDON (Reuters) - Barclays is plotting a revival of its Asian investment bank, defying activist Edward Bramson just weeks after he failed to convince fellow shareholders to back radical cuts to the British bank's trading arm.
Chief Executive Jes Staley wants to make Barclays Europe's premier investment bank and then take on its global rivals by building up beyond its core European and U.S. markets.
"Our commitment to the capital markets platform has meant we may be pulling away from the pack of European competitors now," the 62-year-old American-born banker told Reuters.
"Today we see our peers and principal competition as being the U.S. banks – and we can, and do, compete with them," Staley says of the business he hopes will be his greatest legacy.
Staley and his executive committee (ExCo) want to regrow Barclays' Asian markets business with dozens of hires in the next two to three years, expanding its global banking business there and reversing a 2016 regional retrenchment.
As Europe's economic fortunes wane and competition in the U.S. tightens, selective expansion in Asia might be Barclays' best shot at increasing market share.
"If you want to be relevant to global clients, you have to be in Asia," Stephen Dainton, head of global markets at Barclays, told Reuters.
Staley has been ruthless in his mission to preserve and promote the Barclays corporate and investment bank (CIB) since Bramson appeared on its shareholder register two years ago, moving closer to the day-to-day operation of its business after ousting investment bank boss Tim Throsby in March.
"That clear and unequivocal backing from the top really matters to colleagues in the CIB and I'm glad to give it," said Staley, who has also driven fresh forays into higher-risk, higher-reward businesses including leveraged finance and global securitization. .
'BIGGER WAY'
Staley's direct approach is translating into investment in technology and new hires, Barclays executives said.
Barclays' head of global banking Joe McGrath says his business could hire up to 200 staff in the next two to three years, although this could be fewer if deal flow is slower and the plan depends on improving profitability in the UK and U.S.
"I want to invest in Asia and we will invest in the near term on a very measured basis but at some point, we'll need to take a harder look at what we want to do in a bigger way," McGrath told Reuters, adding that growth markets like China and Southeast Asia will offer investment banking opportunities.
The move to expand the global footprint of the Barclays investment bank is gutsy in view of its recent underperformance.
First quarter returns in the investment banking business fell to 9.5% from 13.2% a year ago, leaving group targets for 9% returns on tangible equity close but unachieved.
Investors also want to see Staley's talk of progress better reflected in its share price, which has fallen 30 pe
Article from motley fool uk
The last time I covered the Barclays (LSE: BARC) share price, I concluded that, despite all of the problems facing the business, the stock could ultimately be worth 80% more than its value at the time “when Barclays finally gets its act together.“
More than a month on, and I still believe shares in the bank could double from current levels, even though activist investor Edward Bramson recently failed in his attempt to get Barclays’ management to shake up the business and prioritise shareholder returns.
Legal troubles
There’s no denying the bank has struggled to recover from the financial crisis. Even though a decade has passed since the entire UK banking sector was brought to the brink, Barclays just hasn’t been able to shake off its past issues.
Indeed, only a few weeks ago, it was fined €210m by the EU for its part in a foreign exchange cartel. It seems to me as if investors just can’t get past the constant string of lawsuits and fines Barclays appears to be facing. And I can’t blame them.
However, these issues are also camouflaging the fact there’s a fundamentally strong business under all of the problems, which is producing fantastic profits. Last year, for example, the bank reported a net income from operations of £2.2bn.
This year, analysts have pencilled in a net profit of £3.8bn. So far, there seems to be little reason to doubt the City’s growth projections for the firm.
CEO Jes Staley is targeting a return on tangible equity (a measure of profitability) of more than 9% for 2019, and 10% for 2020. Insiders have described this goal as “sacrosanct” and Staley isn’t taking any prisoners in his quest to meet the target.
Back in April, it was revealed he is planning to cut bonuses as part of a cost-cutting drive to boost returns at the underperforming investment division, a drastic decision that has risked staff ire. Nonetheless, it’s clear the bank needs to take these actions if its ever going to pull itself out of the doldrums.
Undervalued
Only time will tell if I’m correct in my assertation that the Barclays share price could double from current, but I reckon the odds are in my favour. Even if earnings stay where they are for the next 10 years, there’s still a good chance the stock could double as, right now, it’s dealing at a historical P/E of just 6.8 and price to book ratio of 0.4.
By comparison, shares in international peer HSBC command a P/E of 11.4 and deal at a book value of one. And as well as earnings growth, the City is expecting Barclays’ dividend to rise a double-digit percentage this year as well.
After cutting the distribution to save money in 2016, management decided to double the payout in 2018, and analysts believe an increase of 15% is on the cards for 2019. If this comes to fruition, the stock will end the year with a dividend yield of 5%.
So, overall, not only is the Barclays share price deeply undervalued compared to its peers, but it also supports a
long term down
The long term trend has been DOWN since Jun 18th, 2018 at 10.500000
intermediate term down
The intermediate term trend has been DOWN since Apr 25th, 2019 at 8.200000
short term down
The short term trend has been DOWN since May 17th, 2019 at 8.050000
Bloomberg Opinion) -- Barclays Plc Chief Executive Officer Jes Staley has staked his own personal success on rebuilding the British bank’s securities unit. That pursuit of Wall Street stardom may be leading the firm into treacherous territory.
The remnants of a team disbanded years ago is making millions of dollars for the bank by gaming tax loopholes, Bloomberg News reported on Friday. The group arranges deals that generate profit by lowering taxes on dividends, a practice known as dividend arbitrage. The traders may be generating about 10% of the firm’s stock-trading revenue.
While there is no evidence that the deals contravened any laws, the business is controversial and raises the issue of motivation. Is Barclays simply chasing business others won't touch to show shareholders that it is gaining market share? The lender is a bit player in equities, a business Staley wants to grow.
Just weeks ago, Barclays fended off Edward Bramson, an activist investor who sought to install himself on the board in a bid to trim the investment bank. He argued that the bank’s trading business, which he called a “black box with too much leverage,” should be reined it. It now appears that his assessment - albeit a bit rough around the edges – that the bank is going after the wrong kind of business might not have been so off the mark.
Bramson’s criticized the firm’s excessive focus on hedge fund and private equity firms – customers that can be easily enticed with by providing them with loans. These clients don’t yield as much revenue relative to total assets as those in corporate banking or wealth management, according to the activist. Chasing one-off equity trades with questionable economic objectives such as dividend arbitrage seems to add weight to his concerns: the quality of deals Barclays is pursuing leaves something to be desired.
It’s not exactly the low-risk, recurring income it can count on. Regulators have scrutinized the practices and governments are closing loopholes.
There are other signs that controls at Barclays may not not as stringent as they should be. Last year, the firm’s risk-management systems were downgraded to code amber from green after failing to predict a series of trading losses. It’s not uncommon – Royal Bank of Scotland Group Plc had a similar issue in 2018 – but regulators can demand larger capital buffers as a result, hurting profitability.
While Barclays has been pulling away from its local rivals in gaining market share in recent quarters, Staley has recognized returns at the securities unit are still not satisfactory. So in a recent rejig of the investment bank, he put himself directly in charge of the unit’s divisions, and closer to its decision-making. After reporting a surge in trading revenue – including the equities business – that outperformed U.S. peers in August, Staley said that the firm was once again “running free.”
Investors may question whether that’s exactly what they want. It will be on Barc
The move to expand the global footprint of the Barclays investment bank is gutsy in view of its recent underperformance.
First quarter returns in the investment banking business fell to 9.5% from 13.2% a year ago, leaving group targets for 9% returns on tangible equity close but unachieved.
Investors also want to see Staley's talk of progress better reflected in its share price, which has fallen 30 percent since he took the top job in December 2015.
Despite this slump, Barclays has been the second-best performer among European investment banks since Staley's arrival.
"We've still got a way to go to get to the returns we should be generating, and I want to more directly support that effort," Staley said of the demands ahead.
Barclays wants to grow its Asian headcount in the markets business by 10-11%, or around 60 people, over the next two to three years, Dainton said, adding that in the medium term Asia could deliver between 15-20% of the group's total revenues, up from 10% now.
But it is sidestepping the Asia cash equities business it closed in 2016 and hiring in other trading businesses that play more to Barclays' traditional strengths.
These include emerging markets-focused business in Singapore, its Hong Kong-based credit trading desk, foreign exchange, and electronic trading capabilities.
"It's critically important for us that we have good connectivity across the three financial centres, Europe, U.S. and Asia," Kristen Macleod, managing director of Barclays' forex sales business in New York, said.
FOCUS-Staley defies Bramson in Barclays' Asian investment bank revival
Reuters - UK Focus Reuters - UK Focus31 May 2019
(Repeats from MAY 30 with no changes to text)
* British bank eyes Asian markets revival, 100s of new hires
* Plan complements new U.S. business lines, defies activist
* Scale seen as critical to returns, raising stock value
By Sinead Cruise and Lawrence White
LONDON, May 30 (Reuters) - Barclays is plotting a revival of its Asian investment bank, defying activist Edward Bramson just weeks after he failed to convince fellow shareholders to back radical cuts to the British bank's trading arm.
Chief Executive Jes Staley wants to make Barclays Europe's premier investment bank and then take on its global rivals by building up beyond its core European and U.S. markets.
"Our commitment to the capital markets platform has meant we may be pulling away from the pack of European competitors now," the 62-year-old American-born banker told Reuters.
"Today we see our peers and principal competition as being the U.S. banks – and we can, and do, compete with them," Staley says of the business he hopes will be his greatest legacy.
Staley and his executive committee (ExCo) want to regrow Barclays' Asian markets business with dozens of hires in the next two to three years, expanding its global banking business there and reversing a 2016 regional retrenchment.
As Europe's economic fortunes wane and competition in the U.S. tightens, selective expansion in Asia might be Barclays' best shot at increasing market share.
"If you want to be relevant to global clients, you have to be in Asia," Stephen Dainton, head of global markets at Barclays, told Reuters.
Staley has been ruthless in his mission to preserve and promote the Barclays corporate and investment bank (CIB) since Bramson appeared on its shareholder register two years ago, moving closer to the day-to-day operation of its business after ousting investment bank boss Tim Throsby in March.
"That clear and unequivocal backing from the top really matters to colleagues in the CIB and I'm glad to give it," said Staley, who has also driven fresh forays into higher-risk, higher-reward businesses including leveraged finance and global securitisation. .
'BIGGER WAY'
Staley's direct approach is translating into investment in technology and new hires, Barclays executives said.
Barclays' head of global banking Joe McGrath says his business could hire up to 200 staff in the next two to three years, although this could be fewer if deal flow is slower and the plan depends on improving profitability in the UK and U.S.
"I want to invest in Asia and we will invest in the near term on a very measured basis but at some point, we'll need to take a harder look at what we want to do in a bigger way," McGrath told Reuters, adding that growth markets like China and Southeast Asia will offer investment banking opportunities.
The move to expand the global footprin
Barclays shares could dive 23% if they break this level
by Alistair Strang from Trends and Targets | 28th May 2019 09:00
After a recent tumble, our chartist explains why Barclays shares threaten to open the 'gates of gloom'.
Barclays (LSE:BARC)
Our previous review of Barclays (LSE:BARC) had a pretty miserable expectation should the share price break below our drop target. Unfortunately, this has now happened and there's the slimmest of margins inhibiting it opening the gates of gloom. The problem number is currently 148.82p.
Barclays shares: A fly in the ointment
In the event Barclays closes a session below 148.823p, we're looking for traffic down to an initial 136p. To be blunt, if it even trades below 147p, it shall be viewed as entering this reversal cycle.
Our secondary, if 136p breaks, calculates at 114p. It's rather worrying to note, we've two quite distinct arguments suggesting Barclays share price intends take a visit down to the 114p level eventually.
About the only encouraging signal left is fairly simple. The share has not yet closed below the red uptrend since 2009, hence our fascination with 148.823p.
However, the share price has broken below this trend during the last two sessions, so we'd be far from confident the trend line shall hold.
There's obviously the risk of the somewhat confused series of political results from the EU election entering the fray, if any of the mainstream politicians actually can decide what they stand for.
At present, Barclays is required to exceed 165p to convince us it has exited the drop zone to 136p eventually.
Visually, there's quite a strong suggestion the price will head to 136p, execute some sort of short-lived bounce, then eventually wander downward to 114p.
It needs to exceed 166p to signal our misery is misplaced, allowing recovery to an initial 174p. If bettered, secondary is at 191p.
https://finance.yahoo.com/news/decade-crash-barclays-bets-again-130008432.html
Rating Action: Moody's affirms Barclays PLC's senior unsecured debt ratings and changes the outlook to positive
17 May 2019
Outlook revised to positive from stable on Barclays Bank PLC. Outlook unchanged at stable on Barclays Bank UK PLC
London, 17 May 2019 -- Moody's Investors Service today affirmed the long-term senior unsecured debt ratings of Barclays PLC (Barclays, the holding company) at Baa3 and the short-term Commercial Paper ratings at P-3. The rating agency changed the outlook to positive from stable on Barclays' senior unsecured debt.
The rating agency also affirmed all ratings of Barclays Bank PLC (Barclays Bank) and changed the outlook to positive from stable on the senior debt and deposit ratings of Barclays Bank.
At the same time, the rating agency affirmed the ratings of Barclays Bank UK PLC (Barclays Bank UK), while keeping the outlook unchanged at stable.
The affirmation of Barclays' ratings reflects its ample liquidity and capital above regulatory requirements which mitigate risks from large exposure to capital markets activities and related wholesale funding and its moderate credit risk.
The positive outlook on Barclays' senior ratings reflects Moody's expectation that its operating performance and profitability prospects will improve, benefiting from a significant reduction in litigation and conduct risks. Moody's assessment of the volume of loss absorbing debt under its Advanced Loss Given Failure analysis and of the probability of government support have not changed.
"With large litigations settled and restructuring costs declining, Barclays' profitability is on a path to recovery and the bank is better positioned to mitigate against Brexit-related risks and tail risk from its large capital markets activities," said Alessandro Roccati, Senior Vice President at Moody's. "Capital generation through earnings will likely be sustained and the bank's liquidity is strong" added Roccati.
The affirmation of the ratings of Barclays Bank and the revised outlooks to positive reflects Moody's expectation that its operating performance will moderately improve due to improved revenues, as the recent restructuring starts to bear fruit, and good cost control including adjustments to variable compensation costs, to the extent necessary, are implemented.
The affirmation of the ratings of Barclays Bank UK with stable outlooks reflects Moody's expectation that its operating performance will remain broadly stable over the outlook period supported by good levels of profitability, moderate asset risk, robust capitalisation and good funding and liquidity.
RATINGS RATIONALE
Barclays
The positive outlook on Barclays' ratings reflects the progress the firm has made in its restructuring plan including the de-risking of its balance sheet, its improved asset risk profile, and its improved profitability, supported by the resolution of litigation matters including settlements with the US Department of Justice (DOJ) and adeq
Morning Coffee: The new system that Barclays hopes will save the investment bank, and the banker who sits around making memes all day.
by Daniel Davies 7 hours ago
Morning Coffee: The new system that Barclays hopes will save the investment bank, and the banker who sits around making memes all day.
2
Investment banking is a game of knowing when to double up and when to quit. Both Citi and Barclays have seen significant falls in their trading revenues so far this year, particularly in equities. But while Citi is closing down its CitiCross alternative trading system, Jes Staley’s Barclays is pressing ahead with the new algorithmic system that has seen its equity quant team double in size over the last 18 months.
The Barclays Barx platform isn’t completely new – it’s been around since the days of Jerry del Missier as a trading system for fixed income and rates businesses. But the revamped version is meant to be a fully cross-asset platform, allowing trading on bonds, rates, futures, equities and FX all on one system. That’s ahead of the curve if it can be delivered – even Goldman Sachs’ Marquee doesn’t bring all the asset classes together in quite that way.
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But possibly more importantly, although the concept of Barx isn’t new, the actual software has been “built from the ground up”. Trading is always an arms race, and the development cycle means that a brand new system will be able to offer users more speed and better functionality. In Barclays’ case, they are heavily promoting their data science capability and Barx' ability to let algorithms take advantage of “advanced forecasting” to provide better and better analytics to improve their execution. The idea is that by centralising all the models on a single platform, it will be easier to customise things for clients.
In other words, Barclays has spent a load of money on this thing; it’s even started teaching its traders to write their own Python programs so they can handle the custom analytics without bothering Daniel Nehren and his team. They’ve spent the money because they are hoping to gain back the market share which they (and, in fairness, most other European banks) have been losing, both globally and in their own home markets.
That’s the real story of the new Barx. But....however sophisticated and state-of-the-art the algorithms are, they can only access the trading liquidity that Barclays has, and that in turn is usually going to be a function of market share. The more clients the new platform drags in, the more able Barclays will be to “cross” their orders with each other, and the better the system will work.
This is where the problem lies. There is, unfortunately, no magic bullet solution to bring in market share. And the electronic graveyards are full of platforms that were cutting edge in their time, but for one reason or another never too
A pair of blue-chip analysts today had contrasting views on Barclays PLC (LON:BARC), with Deutsche Bank upgrading its target price, but, Citigroup repeated a sell recommendation. Deutsche lifted the target price to 250p, from 234p, and repeated a �buy� rating. READ: Barclays swings to 2017 loss but shares gain on plans to restore dividend David Lock, Deutsche analyst, in a note, said the bank sent a strong statement of confidence with its dividend and promises of buy-backs. �Now the bank�s capital position is removed as the main market concern, the focus turns to revenues: after stabilizing in 2017, Barclays needs to deliver c.�2.5bn revenue growth over 2018-19 in order to reach its RoTE target of >9%,� Lock said. He added that forex headwinds are a near term issue, but, there�s �cause for some optimism� including expected growth for UK and US retail banking as well as strong potential for improvement in corporate revenues. Pouring cold water, meanwhile, Citi analyst Andrew Coombs repeated a �sell� and a 150p target. �The Barclays investment proposition depends on the credibility of the financial targets, which rely on the ability to grow revenues again (at a c4-5% CAGR), following five consecutive years of decline,� Coombes said in a note. �We view this as challenging.� Specifically, the analyst reckons Barclay�s investment banking business will be key and, seemingly, he doesn�t fancy Barclay�s chances. �We believe it could take a pro-longed period of time to turn around the struggling investment bank, rather than the (quick) 2-3 year plan outlined by management,� Coombes added.
That has changed now, with Joe McGrath running global banking and respected insider Reid Marsh adding Europe to his Asia beat. If Barclays is going to haul itself back to prominence in the areas where it has sagged, it is on Throsby and Marsh that the responsibilities will fall most heavily. With Staley reminding investors whenever he can that Barclays is now the bank he wants it to be, they will see 2018 as a crunch year for the new-look firm. Regulators may yet decide that Staley should be punished more than he has been. If they don�t, it is shareholders that will judge whether or not he has delivered on what he has promised. Full article: https://www.euromoney.com/article/b1773nmll1k9w3/barclays-staley-stays-the-course?copyrightInfo=true Visit http://www.euromoney.com/reprints for additional distribution rights. For more articles like this, follow us @euromoney on Twitter.
Barclays: Staley stays the course By: Published on: Wednesday, March 07, 2018 Barclays CEO has to deliver now he has the bank the way he says he wants it to be. Order What should be the verdict on Jes Staley? At one point the Barclays chief executive appeared to be lurching from one crisis to another, whether it was falling for an email prankster pretending to be his chairman or taking it upon himself to intervene in a whistleblowing case that saw him reprimanded by his board and may lead to yet worse from the UK authorities. But reporting annual results in February, Staley was able to be bullish, telling one TV interviewer that he looked forward to running Barclays for years to come. He can say little else on that matter, of course, but assuming he is allowed to stay, how should he be judged? Those embarrassments apart, a lot has been achieved since he came on board at the end of 2015. The non-core division has been wound down, the Africa business has been sold, exits have been managed in 12 countries, the ring-fence structure required by the UK has been completed and the bank is about 56,000 people lighter than it was when Staley joined. The dividend has been restored and there is even talk of a share buyback � it�s been more than 20 years since Barclays� shareholders saw one of those. Transatlantic franchise Casting the bank as a transatlantic franchise � a strategy derided in the past by some of Staley�s peers (�What does it even mean?� an exasperated rival asked Euromoney in 2016) � doesn�t look like a terribly bad call when the bank makes 40% of its profits in the US and is going to be able to benefit from the much more attractive tax environment created by recent reforms. For that reason, expect more focus on areas like credit cards: the American Airlines deal that Barclays struck in early 2017 has already led to a roll-out to hundreds of thousands of users. Putting the focus back on the investment bank � and in particular its markets businesses � was also needed. For that Staley picked Tim Throsby as his new head of Barclays International, a plain-speaker from a trading background who is keen to make the firm�s risk takers more punchy. Throsby now has a new cohort of his own running the markets businesses, and the early signs are good. The bank suffered in fixed income last year like the rest of the Street, but it is running ahead of where it was in early 2017 in both sterling and dollar terms. It�s not just in markets. The European investment banking business, which has been the challenge for many years, began to look anaemic, even by Barclays� standards, as senior bankers drifted away. Reporting lines and responsibilities were confusing. Fragmenting everything into regions didn�t work. That has changed now, with Joe McGrath running global banking and respected insider Reid Marsh adding Europe to his Asia beat. If Barclays is going t