Barclays retreats from Asia, Brazil and Russia (+ Africa)

[MikeWB]

So far they have exited from Brazil, Russia, Asia and yesterday from South Africa...next move is India! The main cause is due to the new BRICS Development Bank. That bank is reshaping the financial world and will change the way the world does business. It will take them a decade or two but they will be successful. Barclays is the canary in the coal mine. Expect other Rothschild banks to start receding.






Lender aims to remain 'bulge-bracket' investment bank as it closes operations around the world

Barclays has told staff it aims to remain a "bulge-bracket investment bank" while outlining plans to cut up to 1,200 jobs by closing many operations in Asia, Russia and Brazil and exiting precious metals trading.

The move unwinds much of the expansion of Barclays investment bank across Asia, Europe and Latin America engineered by Bob Diamond, its last-but-one chief executive. It also reflects the difficulties that many western investment banks have found in trying to build a profitable franchise in Asia.

In a memo seen by the Financial Times, Tom King, head of Barclays' investment bank, said: "By focusing our business on areas where we have sustainable competitive advantage, we are putting ourselves in a position where we can not just survive but thrive in a dynamic, complex operating environment."

The retrenchment comes as many of the world's biggest investment banks are cutting staff and pulling out of non-core countries in response to growing pressure from regulators and declines in fixed income trading. Barclays said revenues at its investment bank would be flat in the fourth quarter, just after rival Deutsche Bank reported a decline on Wednesday night.

While many of the Barclays cuts were planned before Jes Staley took over as chief executive at the start of December, they mark the first significant strategic move by the former JPMorgan Chase executive.



Barclays shares rose more than 2 per cent, though they are down a fifth in the past year.

Mr Staley said in a statement on Thursday: "With these actions, we are accelerating the investment bank strategy outlined in 2014, focusing on its core strengths and running the business for returns."

"We continue to build on the business's dual home markets in the UK and US, and remain committed to a strong presence in Asia and Europe, the Middle East and Africa, consistent with operating a leading global investment bank within the Barclays group."

The latest job losses are expected to be on top of the 7,000 announced in 2014. Barclays investment bank had 20,500 staff at the end of 2014.

About two-thirds of the cuts are expected to hit operations in Asia. The bank held talks with various parties about selling its equities trading and convertible bond trading businesses in the region before deciding to shut them down.
Chart: Investment banking performance

Mr King said Asia-Pacific remained an "important part of our global network" but added that management was "sharpening our focus on the geographies and products where we have a clear competitive advantage, with a physical presence only in China, Hong Kong, India, Japan and Singapore".

The bank said it was closing offices in nine countries: South Korea, Taiwan, Malaysia, Indonesia, Thailand, Philippines, Australia, Russia and Brazil.

It is also restructuring its US securitised product trading operations to focus on asset-backed and commercial mortgage-backed securities. Mr King said Barclays would stop trading residential loans, collateralised mortgage obligations and some forms of commercial mortgage-backed securities. It is also evaluating options for leaving precious metals trading.

Chirantan Barua, analyst at Bernstein, said the cuts would put Barclays at a disadvantage to its main US rivals, which are keeping a deeper Asian presence. "Patch-up work yet again from another European broker dealer," he said.

The Barclays retrenchment comes after it sold off retail banking networks in Spain, Italy and Portugal. The cuts mirror similar moves by Deutsche, which recently announced that it was closing most of its investment banking operations in Russia, and HSBC, which last year sold its Brazilian bank.



"Ultimately the whole investment banking industry needs to come down on costs, but I wonder if this will be enough for Barclays," said Chintan Joshi, banks analyst at Nomura. "The big question for Barclays is do they have enough capital."

Barclays is finishing plans to ringfence its UK retail banking and its US operations into separate entities. Both moves could boost its capital requirements.

It also faces demands from the Basel Committee of global regulators to hold more capital against its trading book.

The UK bank's clients were informed in a memo on Thursday morning that it was shutting cash equity research, sales and trading as well as convertible bond trading businesses across all Asian countries. That will involve several hundred job losses.

"Research sales and related activities in Asia will cease immediately," the memo said.



Mr King said the bank was committed to its equity and fund structured markets and equity finance businesses in Asia, as well as its macro and credit trading operations in countries where it maintains a physical presence.
Chart: Barclays share price and index (rebased)

Mr King said Barclays would maintain a full Asian offering in debt finance, risk management, infrastructure finance, and cross-border mergers and acquisitions advice.

The bank will also close its sales and research coverage of cash equities in central and eastern Europe, the Middle East and north Africa, centralising cash equities operations for these regions in London. In Brazil, it will shift trading operations to New York and London, with a "continued banking focus on Brazilian clients" in the country.

Mr Staley is expected to outline his broader strategy when the bank reports annual results on March 1. He is reviewing whether to keep the lender's large African operations.

John McFarlane, chairman of Barclays, gave a strong hint that more reductions were being planned last year when he said: "We don't want to be a 100-country investment bank." The lender's Asian operation "is not performing and we don't like things that actually don't make money", he added.
Another one bites the dust

Asia has claimed its latest victim in the cash equities business.

Barclays is cutting more than 1,000 jobs worldwide and closing its cash equities research, sales and trading along with convertible bond trading — some with immediate effect.

The costs of cash equities units have risen globally but Asia, with myriad countries that need to be served by locally based teams, has proved particularly difficult to crack.

"The debate is really about who pays for research," said one Hong Kong-based hedge fund manager. "If you don't have a chunky market share already in the business and you're not supported by an investment bank, then you're done."

Standard Chartered cut its cash equities business in January last year, axing about 200 jobs with the hope of saving the bank $100m in 2016. The bank began its move into the business in 2009 — just before Barclays expanded — with the buyout of broker Cazenove Asia.

France's BNP Paribas said this month that it would outsource its equities trading platforms to cut costs after bolstering its cash equities business as late as 2013.

Barclays began ramping up its equities business starting in 2010 with several high-profile hires. League tables, however, show the disconnect between its bookrunning efforts and the cash equities operation meant to support it.

Barclays climbed to No 34 in Asia-Pacific rankings excluding Japan based on equity capital markets bookrunning, a jump of 10 places from the year before. That year the value of the deals in that segment were just $2.3bn despite the boost to its team.

Since then, Barclays has fallen back in the tables to No. 46 last year, with deal value hitting in $1.3bn.

http://www.ft.com/cms/s/0/b4430f6a-c032-11e5-846f-79b0e3d20eaf.html?siteedition=uk#







Barclays set to exit African business

Barclays' new chief executive is planning to announce on Tuesday that the British bank has decided to exit its African operations in a bold move to refocus the bank on its core UK and US markets

After a review of the African business led by Jes Staley, the bank's board decided last week that in principle it made strategic sense to get out of the continent, according to people familiar with the matter.

The board has delegated authority to a subcommittee to examine the practicalities of how and when to sell Barclays Africa, one of its four main lines of business. By delegating authority it avoided having to disclose the decision immediately.

This means that a sale of the bank's 62.3 per cent stake in its Johannesburg-listed subsidiary will depend on numerous factors, including market conditions and the response of regulators.

The stake is worth R78bn ($4.83 billion) at current market prices. Investment bankers say there are no obvious strategic buyers for the African business. The value of the stake has fallen in recent months, making the option of steadily selling the stake to institutional investors less attractive. Barclays declined to comment.

Several people who have met Mr Staley recently say he recognises Africa is one of Barclays' few genuine growth areas, but he believes it is becoming a costly distraction as the South African rand devalues and the country's economy slows down.
HSBC posts $18.8B FY pretax profit, misses forecast

The bank also sees extra risks of corruption and misconduct in Africa. "Barclays does not own all of the equity, but it owns 100 per cent of the risk if something goes wrong," said one of the people.

The decision to pull out of Africa will reinforce Mr Staley's strategy of refocusing Barclays on its core British and American markets. Last month, he announced plans to further trim the investment bank, cutting up to 1,200 staff by closing smaller operations in Asia, Brazil, Europe and Russia.

One benefit of selling out of Africa is that it could address worries about Barclays' capital. Analysts at Jefferies estimate that a sale could add as much as 0.8 percentage points to Barclays' core capital ratio — taking it much closer to its 12 per cent target.

"While we expect the process of selling Barclays Africa Group to prove more difficult than the market currently expects ... a wholesale exit from Africa would seem to make sense," Joseph Dickerson, banks analyst at Jefferies, said in a note this month.

Barclays has had operations in parts of Africa for almost a century. Barclays Africa Group Limited, which includes the South African branch network Absa, is one of the largest banks on the continent, with a R991bn balance sheet. It has 45,000 employees — a third of all Barclays staff — and 1,267 branches across 12 countries, including Kenya, Ghana, Tanzania, Mozambique, and Uganda.

But the recent contribution of the African business to the overall group's profits has been hit by the devaluation of the South African rand against the British pound. The African unit's return on equity was 9.3 per cent last year — below the bank's target of 11 per cent.

The rand crashed to all-time lows against leading currencies late last year. While it partly recovered after South African president Jacob Zuma reversed his controversial appointment of a relatively unknown MP as finance minister, it is still down by a quarter against the pound over the past year.

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South Africa's black economic-empowerment rules mean that Barclays' stake in its African business is capped at 75 per cent. The UK bank has a minority of board seats.

Talks over a deal to sell Barclays' Egyptian and Zimbabwean operations to its South African subsidiary broke down this month, and the bank is now likely to also sell its operations in those two countries.


http://www.cnbc.com/2016/02/28/barclays-set-to-exit-african-business.html