Barclays: Leaving Asia in 2016 Was a Mistake It Intends to Rectify
Barclays plans to rebuild its presence in Asia, focusing on China, India, Singapore, and Australia and is also hiring in Japan and Hong Kong. A significant restructuring exercise in 2016 and 2017 saw the British banker close its cash equities business and scale back its investment banking business in the region by withdrawing from Australia, Indonesia, Malaysia, Philippines, South Korea, Taiwan, and Thailand. The same exercise also involved pulling out of Africa, leaving Barclays focused on its transatlantic strategy.
Pulling Out of Asia Was a Mistake
The former CEO responsible for driving the restructuring, Jes Staley, addressed audiences at a Morgan Stanley European financials conference earlier this year. He acknowledged that while concentrating on the group’s strengths at home and in America had proved successful, pulling back from Asia had been a mistake. So now, Barclays is looking to grow its roughly 1,000-strong Asia-Pacific (APCA) staff complement by hiring staff in its investment banking and wealth management businesses in 2022.
It's already hired nine critical executives for the region since March, including Evonne Tan as Head of Private Bank, Singapore; Kelvin Teo as APAC’s Head of Equity Capital Markets; Ee-Ching Tay as Head of Southeast Asia Banking; Girish Mithran as regional Head of Program Trading; Yehong Ji as Vice Chairman, Banking, Greater China; and recently Mani Joseph as Head of Asia Special Situations based in Hong Kong.
Staley resigned as CEO in November following investigations into the transparency and nature of his relationship with convicted sex offender Jeffrey Epstein. Barclays has reportedly contacted its significant shareholders to prepare them for potential disclosure of "uncomfortable" content in emails between the two men.
Barclays Is Experiencing a Boost in Trading Operations
Barclays stock has gained 32.3 percent compared with a 12.1 percent average industry growth in the past twelve months. Its initiatives to improve efficiency over the last few years have reduced expenses while closing several non-core operations has allowed it to streamline operations and focus on the bottom line.
Jaideep Khanna, head of Barclays Asia-Pacific and India chief executive, expects the growth to continue, saying the organization will stick to its strengths. He also maintains it's a different beast from 2016, saying now it has greater self-awareness and better local knowledge.
In December 2020, Barclays bought a 10 percent stake in the Australian start-up investment bank Barrenjoey. The acquisition signaled the group's return to APAC and resulted from a relationship established before Barclays closed its original Australian operation. Ken Mackenzie, Barrenjoey’s strategic advisor, is ex-chairman of BHP Billiton, a former client of Barclays in Australia.
International Banks Eye Chinese Market
Barclays’ boost to trading operations positions the group well and partly accounts for renewed interest in Asia. However, Staley expressed interest in China as far back as 2019, before the pandemic put everything on hold.
And Barclays is by no means alone in seeing the region's potential. Ever since China removed ownership restrictions for financial actors in 2018, rivals like HSBC Holdings, UBS, Citi, and Standard Chartered have also been building up a presence in Asia with eyes on China’s $53-trillion financial market.
In fact, when it comes to China, Barclays is on the back foot compared to most of its competitors, with only a single branch and one representative office. In contrast, Citigroup has already applied for a China Securities Regulatory Commission license to form a wholly-owned investment bank. It is also considering applying for a futures license. And it’s anticipated Citi will hire more than a hundred people in China over the next couple of years to run its growing operations.
Switzerland’s UBS is also well-entrenched in China as the first foreign bank to get permission for a majority stake in a Chinese joint venture. It's reportedly considering increasing its stake from 51 percent to 67 percent but has no interest in full ownership. It views Beijing's shareholder role as advantageous to accessing valuable networks within the country.
HSBC is recruiting for its China wealth management business and is reportedly already ahead of its hiring targets. It intends to hire 5,000 wealth planners for the Asian region over the coming five years, promising to pour in $3.5 billion worth of capital to achieve this and make technology improvements to its infrastructure in the area. It may also shift $6 billion capital from underperforming areas in Europe and America to gear its Asian wealth management business to high-net-worth clients in China, Hong Kong, Singapore, and elsewhere in the region.
Barclays in India
Barclays has a significant presence in India and plans to invest a further $400 million to grow its Indian corporate, investment, and wealth management businesses. It’s the only sizable international bank to base its regional CEO out of the country, indicating how it rates the nation's growth prospects and influence in Asia as a whole.