Barclays Gains in Asia, Up 2.5%, Eyes India & Australia Growth

Key Takeaway

• Barclays Plc reports revenue growth in Asia, attributing success to strategic hires from firms like Goldman Sachs and a 2.5% revenue increase in its global markets business.
• The bank's expansion strategy includes diversifying away from US banks amidst stricter capital rules and sanctions, enhancing its appeal to Asian clients.
• Focus areas for future growth include private credit in India and Australia, aiming to boost prime financing business and expand equity derivatives offerings.

Barclays Expands in Asia

Barclays Plc has reported significant strides in its Asia operations, attributing success to the strategic hiring of nearly a dozen senior sales and trading staff over the past year. These hires include six directors for its macro unit from prestigious firms such as Goldman Sachs Group Inc., enhancing its trading capabilities in currencies and rates. Additionally, Barclays has bolstered its equity derivatives, private credit, and distressed debt operations with two managing directors, according to Hossein Zaimi, head of Asia-Pacific markets.

The bank's focused expansion in Asia has yielded a 2.5% increase in revenue for its global markets business in the region last year. This growth is particularly notable against the backdrop of an 18% decline in the global markets business, as per a public filing. Zaimi highlighted the Asian clients' preference for diversification, favoring non-US banks while seeking the same level of service as US counterparts.

Strategic Hires and Revenue Growth

Barclays's strategic recruitment has directly contributed to its performance in Asia. The macro and equities units saw a 4% jump in revenue, showcasing the impact of the new hires. The bank's Asia business now matches the scale of its larger Wall Street rivals in terms of market operations percentage, a significant achievement for Barclays.

The bank's ambition to position itself as Europe's last-standing global investment bank is evident in its pledge to boost its return on tangible equity to 10% this year and 12% by 2026, with the first quarter already showing a 12.3% return. This growth trajectory is supported by Barclays's record markets revenue in Asia for the third consecutive year in 2023.

Diversification and Regulatory Landscape

Barclays's expansion comes at a time of heightened geopolitical tensions and regulatory changes, particularly in the US. Zaimi pointed out that more stringent capital rules in the US and the potential for increased sanctions could drive clients to diversify their banking relationships towards non-US banks. This shift is partly due to some US banks' inability to provide the same level of financial support as before.

The bank is also capitalizing on the flow of Japanese money into the US and the strong appetite from US clients for investments in Asia, particularly in India, Japan, and Australia. Barclays's presence in these regions positions it well to benefit from these investment flows.

Focus on Private Credit and Future Plans

Under Zaimi's leadership, Barclays has enhanced its macro sales and trading capabilities in emerging markets and identified private credit as a key growth area. The bank has made strategic hires, such as Abhay-Kumar Sinha for leading the private credit business, focusing on India and Australia due to their attractive investment landscapes.

Barclays aims to continue boosting revenue from its prime financing business and expand its equity derivatives offerings. The bank's strategic hires and focus on diversification and regulatory adaptability underscore its commitment to strengthening its position in Asia.

Management Quotes

• Hossein Zaimi, head of Asia-Pacific markets at Barclays:

  "Most Asian clients want to deal more with non-US banks because of their desire for diversification. At the same time, they also need someone that is as good as US banks."