Restructuring of Barclays
As you may have heard, Barclays is going to cut 19,000 jobs in the next two years. It plans to reduce it's investment banking division by more than 25%.
What do you guys think about other banks? Do you think they will soon follow? My point is that UBS did the same thing in 2012. I realize the regulatory environment enforced by the UK has made it tougher for Barclays to hold more leverage. But will other banks soon follow UBS & Barclays?
FICC gone --> crap comp for IBD --> talent movement
Buddies at Barclays in IBD are beginning to look elsewhere. Bonuses weren't great either for associates so there was already interest in leaving. Now it's more urgent.
Rather than taking in all the hype, has anyone actually read the announcement from Barclays? You can find the link here: http://announce.ft.com/Detail/?DocKey=1323-11946081-01O50C76GCEFTIJNK2Q…
It may not be fair to say that this reorg won't have any impact on the rest of IBD (such as advisory, etc), but it doesn't seem like the advisory part of the investment bank will be impacted (as alluded to earlier).
The key take-away is - people in advisory will likely be fine but the reorg (and exodus of senior bankers) will definitely impact morale. oh, and don't buy into the media hype, read from the source and form an opinion for yourself.
Oh god stop with the misinformation, this is really pissing me off. Bonuses for groups that did well were good, bonuses for groups that did not do well were bad. I got great bonuses this year on par with any other Wall Street bank cause I was in a revenue producing group. If you kids do not want to work for Barclays that is fine, there are thousands of others kids on Ivy League campuses who I interview every year that do (we have no trouble filling our rooster). Barclays is still #4 in U.S. M&A and #6 Globally for M&A (check the league table kids), and the bank is #1 in NatRes (check back to back Freeport deals last week) and Power & Utilities (check $12.2 billion Exelon deal + financing for TXU bankruptcy). The cuts are in FICC, advisory is barely affected, going forward advisory would do much better actually as capital allocated to trading has been given to IBD and Global Finance (Capital Markets). For example, today Barclays hired the Head of Financial Institutions (Insurance) Tom Vandever from Goldman (he was a partner there with equity stake). There will be another slew of big hires in the next few months replenishing the ranks. Wall street is a revolving door, get used to it.
What about the hens? Do they get filled up easily too?
nicely put - a silver banana for you!
You're at a tier 2 bank bro, only unpreftigious guys have to bring up the numbers...
@Powa23 - whose books do your relationship loans sit on?
If they sit on IBD's books (or will with greater capital allocation to IBD), your advisory fee outlook is more secure.
If your IBD relied on FICC to hold the loans IBD arrange to its clients so it could win their fee paying business, and if IBD can't book as many loans under the new regime, then your IBD fee revenue outlook is gloomy. As much as we'd all like to think IBDs win advisory roles on the quality of their advice, the reality for many banks is that you lead with balance sheet (via loans) and get rewarded with fee paying advisory roles.
And this...
... sounds like thinly veiled code for saying Barclays is shifting from balance sheet led IBD (ie what I was talking about above) to making your IBD directors originate deals on the basis of their quality advice alone ie not buying their way into fee paying roles by using balance sheet to make loans.
That's a tough gig in this market.
EDIT: Barclays can continue syndicating, of course. But it's not clear to me how much fee revenue has been generated off non-syndicated relationship loans that make up Barclay's bloated RWA position. Given the higher cost of regulatory capital these days plus Barclay's comments about reducing RWA/balance sheet use, shifting to "origination-ed" banking - it sounds like Barclay's has been take stuff on balance sheet that the syndication market doesn't have appetite for, not just the RCFs that you'd normally have to hold on a DCM underwrite-and-syndicate.
Barclays names head of M&A for financial institutions: http://www.reuters.com/article/2014/05/12/us-barclays-ma-idUSBREA4B0YV2…
"As a part of that announcement the bank has said it would focus on returns and an investment banking model that was "origination-led," in which financial advisory is a priority for the firm going forward."
Barclays' restructuring - Impact on its equity research (Originally Posted: 07/22/2014)
Hi all, with all the restructuring Barclays been going through, reducing its IB exposure, can any insiders share their views on its equity research department? I have an interview coming up with Barclays equity research group, and would like to know more. Thanks for any insights!
I'm in ER at a MS/GS/JPM so discount my opinion as you see fit...
It poses are significant threat to the equity research franchise. Let's be honest - EQR is a cost center... While firms attribute flow to the soft-dollar structure, the value is difficult to quantify.. At most larger firms (Barclays included), equity research is deployed to drive banking business for the sector groups - i.e. the senior analyst has embedded themselves with companies that are looking to go public down the road, etc. I would argue that if they are reducing their scale of the IB franchise, this almost guarantees a reduction in equity research, or at least a consolidation - for instance, Barclays rolled up some sub-sectors of Tech Hardware into a single analyst.. I presume this will take place if not abandoning some sectors all together..
Thanks for your comments! That's my initial thought but I don't understand why they are still hiring. If cutting is in the future, what's the point of hiring someone new and let them go 6 months down the road...
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