The London-based bank overtook its Zurich counterpart to become the largest investment bank outside the United States in the second quarter of this year with $1.26 billion in investment banking revenue, representing a market share of 4.1%, according to Dealogic. JPMorgan Chase & Co. was the top investment bank in the quarter with $3.15 billion in revenue, or 10.1% market share.
At Barclays, executives say the collapses of Archegos Capital Management and Greensill Capital, key clients of Credit Suisse, have upended the investment banking landscape. This has created a rare opportunity for Barclays to capture market share in advising on buyouts and arranging debt and equity sales for global companies.
A Credit Suisse spokesperson declined to comment.
Barclays went after its injured competitor. He recruited several bankers from Credit Suisse, including Tim Devine to advise financial companies, Eric Federman to advise technology and media companies, Ihsan Essaid to co-lead M&A advisory in the Americas and Kamal Ahmed to advise semiconductor companies.
Barclays chief executive Jes Staley has long pushed to develop the British lender’s investment banking arm. The former US executive of JPMorgan has argued that having an investment bank acts as a counterweight to his more stable UK consumer bank, eyeing a smaller, UK-based version of his former employer .
This push has gained momentum during the pandemic. Investment banking revenues have skyrocketed. Mr Staley was given another shot in the arm when activist investor Sherborne Investors said it had sold its entire 6% stake in Barclays, abandoning a year-long campaign to focus more on the British consumer bank.
Investment bankers at the UK lender talk about their ambition to make Barclays one of the world’s top five players and the leading non-US-domiciled investment bank. The top five investment banks are all based in the United States. To enter the elite group, Barclays would have to oust Citigroup Inc. from the fifth position.
Barclays’ strategy is to increase revenue in mergers and acquisitions and equity capital markets, or to help companies issue new shares. These two areas have been Credit Suisse’s strengths.
Barclays recently promoted New York bankers John Miller and Jean-Francois Astier to lead a new management team for the investment bank, a sign of the bank’s drive for growth. The new team will implement the expansion strategy, Paul Compton, a member of the bank’s executive committee, said last week.
The latest progress report comes on Wednesday, when Barclays announces its results for the second quarter.
An example of its investment banking victories: Barclays advised and arranged financing for a group of private equity firms who agreed to buy medical supplies company Medline Industries Inc. for over $30 billion , in one of the largest leveraged buyouts since the financial crisis. .
Barclays has struggled in previous attempts to bring its investment bank into the front runners. He took over the U.S. operations of Lehman Brothers Holdings Inc. in 2008 and attempted to build a global footprint, only to drastically reduce operations earlier this decade.
Mr Staley, who joined the bank in 2015, reversed his predecessor’s efforts to cut the investment bank. One of his bankers described him in a recent interview as riding a white horse to save the operation.
But profits pouring into the investment bank are not encouraging investors to flock to Barclays shares. Barclays is worth around 0.53 times its book value, less than the 0.72 times book value at which its British retail banking rival Lloyds Banking Group PLC trades.
There are concerns that higher salaries could drive up investment banking costs, according to Christopher Cant, an analyst at Autonomous Research, a unit of AllianceBernstein.
“The question now for Barclays is, how well can they maintain the cost-income ratio for this division?” Mr Cant said. “Revenue performance has been very good, but how much will they lose?”
Past forays into investment banking have failed other lenders. It is a notoriously volatile business, booming when times are good, as it is now. But revenues can evaporate quickly, while costs remain high.
A senior Barclays banker said the bank could not afford to make a mistake. European rivals including Deutsche Bank AG and UBS Group AG have cut their investment banking business in recent years following billions of dollars in losses.
The bank is also rebuilding its presence in Asia, where Barclays significantly reduced its presence before Mr Staley took over. In Australia, Barclays is investing approximately $33 million in Barrenjoey Capital Partners, a new Australian financial advisory firm with which it will partner to provide services.
This story was published from a news agency feed with no text edits
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