Barclays’ Wealth and Investment Management, Americas franchise which had approximately 180 financial advisers in the US managing approximately $56bn in total client assets as of May 31, 2015, will be sold to Stifel Financial Corp. after the brokerage and investment banking firm entered into a definitive purchase agreement with the UK bank yesterday.
As part of this agreement, Stifel will be the US private wealth distribution partner for certain of Barclays’ equities and credit new issue securities in the US, including structured notes, although this is an ongoing discussion to be resolved over the coming months, SRP understands.
Barclays was the third most active issuer of structured notes in the US market throughout 2014 with a 10% market share and more than $4.8bn in sales, beating some domestic household names in the structured products market such as Goldman Sachs (9% market share/$4bn in sales), Morgan Stanley (6% market share /$2.8bn in sales) and Bank of America (5% market share / $2.5bn in sales). Year to date, the UK bank has sold over $2.6bn and remains in the top three providers ranking behind Goldman Sachs ($$3bn) and JP Morgan ($4.7bn). There are currently seven structured notes open for subscription sold by Barclays Bank in the US.
The acquisition is part of Stifel’s plans to grow its global wealth management business and follows the purchase last week of Sterne Agee Group in a move to complement the firm’s fixed income platform, which now has more than 2,800 financial advisers and independent representatives with over $200bn in client assets.
Barclays’ wealth franchise in the US is a “high-touch, high-service” business for sophisticated clients, said Ronald J. Kruszewski, chief executive of Stifel in a statement, adding that the combination of the depth of Barclays’ franchise and breadth of Stifel’s product offerings, “coupled with an entrepreneurial and client-focused culture”, will create a premier wealth management platform in the industry.
Barclays’ chief executive of global wealth and investment management, Akshaya Bhargava (pictured), said that the sale of the bank’s US wealth franchise to Stifel represents a good outcome for Barclays and for its clients as it will help the franchise to grow over the long term, while providing clients “expanded services” and “a broader product range” including structured solutions.
Barclays’ Wealth and Investment Management, Americas, which is concentrated in New York and 11 other major metropolitan cities in the US, had on balance sheet assets of approximately $1.4bn and client loans of approximately $1.5b held through Barclays’ clearing firm, at the end of May 2015.
Barclays, said Bhargava, remains committed to its international Wealth and Investment Management business, which is a successful and growing part of the Barclays Group, and to its other businesses in the US.
Terms of the sale were not disclosed. The transaction is expected to close in mid-November of 2015, subject to regulatory approvals and customary conditions. Stifel’s lead financial adviser was Keefe, Bruyette & Woods, Inc., a Stifel company, and Stifel was represented by Bryan Cave LLP.
The sale is expected to have a minimal impact on reported financials, said Barclays in a statement.
The US Securities and Exchange Commission (SEC) charged Barclays Capital on September 2014 with failing to maintain an adequate internal compliance system to ensure the firm did not run afoul of any federal securities laws after its wealth management business in the US acquired the advisory business of Lehman Brothers in September 2008.
The US regulator found that Barclays failed to enhance its compliance infrastructure to integrate and support the acquisition and rapid growth of the advisory business from Lehman which contributed to other securities law violations by the UK bank which was given a $15m penalty and to undertake remedial measures, including engaging an independent compliance consultant to conduct an internal review.
Barclays dropped the ‘Wealth’ tag from its advice arm in the UK in early 2012 as part of a rebranding of the business having shelved its mass market advice arm Barclays Financial Planning in 2011, deeming that offering financial advice through retail branches was no longer viable once the Financial Services Authority’s (FSA) Retail Distribution Review (RDR) came into effect. The change was part of a wider rebranding that brought all the bank’s divisions including its investment banking arm, Barclays Capital, and its business banking division, Barclays Corporate, under the Barclays brand.
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