It was bad news for Barclays staffers earlier this year when the bank announced it was set to cut 19,000 jobs as part of a strategic review to revamp its struggling investment bank. In the structured products market things had gone from bad to worse with the bank seeing its share of the global structured products market fall significantly to the point where it had slipped out of the top provider rankings in markets where it was a traditionally strong player.
Barclays came out of the 2008 crisis as a winner in the structured products space following the acquisition of Lehman Brothers’ US business and its role as a pioneer in the exchange-traded notes (ETN) market but four years later it was forced along with other investment banks to undertake a review that resulted in the restructuring of its equity derivatives/structured products business. During this period Barclays saw a slowdown in activity, especially in Europe where the UK bank slipped out from the top 5 providers table, as well as the departures of Philippe El-Asmar, the former head of distribution APAC, Kevin Burke, the former global head of investor solutions and funds and advisory distribution, and a number of senior staffers from its investor solutions division. The bank concluded this phase of the restructuring with the offloading in September of its retail banking, wealth and investment management and corporate banking businesses in Spain to CaixaBank (formerly La Caixa) which provided the Spanish lender with more than €1.5bn of estimated assets under management (AUM) in structured products.
According to Corinne Grain, head of EFS sales, EMEA and head of EFS Pillar I sales, global, at Barclays, this consolidation is in line with a key trend in the global market, particularly through 2012 and 2013. “We have seen certain providers retrenching or exiting the business, and others retooling and expanding their platforms,” she told SRP. “Regulatory developments globally will continue to shape the industry going forward. This, combined with a more disciplined approach to cost management, capital and liquidity, will continue to increase the spotlight on returns.”
New set-up
The reorganisation was completed this summer when the bank launched a new equities and funds structured (EFS) markets business with three areas of focus including non-linear derivative solutions (structured notes, principal protected products, equity and hybrid structured options, credit solutions and structured solutions) for investor clients such as asset managers, insurers, private banks and other financial intermediaries; quantitative indices and strategies (QIS) across-asset classes, including cross-asset risk premium portfolios for endowments, protected long-term savings products for pension funds, customised protected solutions for insurers and structured investments linked to mutual and hedge funds; and structured financing and collateral solutions including global margin, collared financings and multi-asset collateral management. This segment will also deliver capital structure management tools to corporate clients, including structured share repurchase programmes, convertible bond hedge overlays, synthetic equity issuance and employee stock ownership plan (ESOP) management.
Under the new set-up a number of Barclays’ fixed income, currency and commodities (FICC) structured trading teams will also be integrated into the EFS business, and as part of the reshaping of its structuring business to a product-agnostic model a significant part of the bank’s structuring team will also be joining EFS.
However, Grain told SRP, the new structure will not change the way Barclays serves its institutional and retail clients. “Barclays has always been an active player in this market across both retail intermediary and institutional channels,” she said. “The composition does vary across markets. However, our approach remains consistent in each region. We have seen increased take-up from institutional clients – including insurance companies, asset managers and pension funds – and within a relatively well balanced business this continues to represent an important and increasing part of our portfolio.”
Grain also said that equity derivatives remains a core business for the group but that the business needed to be streamlined to fully align it to its clients’ needs. “We feel a dedicated solutions-based approach across the entire client franchise with a fully integrated trading, structuring and infrastructure model allows us to more effectively meet our clients’ needs,” she said. “Maintaining a global portfolio approach and providing an asset-agnostic menu of solutions is at the core of our client service strategy.”
According to Grain, Barclays’ clients are increasingly looking for bespoke solutions, whether driven by balance sheet or regulatory capital considerations, or by the requirement to access a particular investment strategy. “This approach allows us to be an even more valued partner to our clients,” she said.
Product origination
At a product development level, Richard Couzens, the former global head of product origination for investor solutions has been appointed co-head of the expanded global product origination team across the EFS business, alongside Brad Hurrell, formerly head of structuring, EMEA.
The bank’s expanded global product origination team includes a focused platform development effort covering all issuance capabilities, multi-asset listed solutions and the bank’s repack business. The product origination team will also manage the professional practice agenda including regulation, governance and controls across the EFS business.
Grain said that under the new structure the bank will continue to invest in its platform to remain a key player in the structured products market. “With our focus and investment over the last 10-15 years we remain committed to providing client-driven solutions with the appropriate market and investor focus,” she said. “Innovation in technology and efficient accessibility of product forms an integral part of our offering, fully complementing client needs, particularly across private banking clients.”
Regional coverage
As reported, under the new set up, as head of EFS sales, EMEA, Grain will report to the bank’s head of equities distribution, Mike Di Iorio, and remains a member of the EFS executive committee and the equities sales management committee. In her new role she will work with Barclays’ European country heads and Matteo Ferrario, head of EMEA solutions distribution. Grain will also have global responsibility for sales for non-linear derivative solutions, and will work with Omar Gzouli, as head of trading, to implement a strategy from origination to distribution.
Going forward, Barclays’ EFS business in the US will be managed by Johnny Wu, formerly head of investor solutions, Americas, in New York, who has been appointed head of equities and funds structured markets (EFS) sales, Americas. Wu will remain in New York and reports to Di Iorio and Eric Schlanger, head of equities, Americas. Wu also remains a member of the EFS executive committee.
In the Asia-Pacific region, Barclays’ EFS business is led by Yasuhiro Ishibashi, head of EFS sales in Asia Pacific with David Campbell, as interim head of distribution for the Asia Pacific region; Samson Yip, former head of investor solutions for non-Japan Asia at Barclays in Hong Kong has been named head of North Asia distribution, reporting to Campbell; and Jeffrey Juan, the new head of EFS sales for the region, reporting to Ishibashi who in turn reports to Di Iorio.
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