Barclays Expands Prime Broking As Rivals Pull Back After Archegos

Barclays is making a fresh push into the top brokerage sector after rivals pulled out amid heavy losses caused by the collapse of family office Archegos Capital.

The British lender is hiring staff and aiming to capture market share in flagship services as part of a plan to expand its equity business, according to Paul Leech, co-head of equity at Barclays .

“We see premier services as a huge opportunity and are investing heavily in the business,” he said. “We are expecting to increase our market share, and to provide the same level of customer support we need to continue to expand our resources to support that growth.”

The banks’ top brokerages, which provide services to hedge funds and family offices, have been shaken by the collapse of Archegos, run by Bill Hwang, a Tiger Global alum. . Its collapse has cost banks affected by the crisis a total of $10 billion since March.

Credit Suisse was hit hardest by the explosion, losing $5.5 billion after an independent report on the incident described it as an “unwarranted” attitude towards risk. On November 4, the Swiss bank revealed plans to shut down much of the unit, which executives say relies too heavily on leveraged bets offering little return. Chief Financial Officer David Mathers said the closure would cost Credit Suisse an additional $500 million in revenue next year.

READ Credit Suisse strikes deal with BNP Paribas over top service customers

Nomura, the second hardest hit from the Archegos collapse with a $2.9 billion loss, is also pulling out of the top brokerage business. The three largest top brokers – Morgan Stanley, Goldman Sachs and JPMorgan – have all indicated their intention to maintain or grow the units.

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“Customers tell us they don’t want to be too centralized in any one bank and they also see the benefits of diversifying with a European bank,” says Leech.

In Europe, Barclays is the fifth-largest leading broker, with a 15% market share, according to data from Preqin, behind Morgan Stanley, Goldman Sachs, JPMorgan and UBS.

Youssef Intabli, head of equity at data provider Coalition Greenwich, said: “The impact of Archegos is the concentration of the top brokerage business at the top three banks, which have balance sheets. accounting and risk appetite. “But I think there will be a reallocation of those balances over the next 6 to 12 months to avoid overexposure to the big banks and this is an opportunity for European banks and their smaller companies. USA.”

BNP Paribas is also expanding its main service unit. It took over Deutsche Bank’s shuttered core services division and has now reached an agreement with Credit Suisse to move its clients to the French bank.

Leech, who was promoted to co-head of global equities at the British lender in May with US-based Todd Sandoz, said Leech, who was promoted to co-head of global equities at the UK lender. UK lender in May along with US-based Todd Sandoz after Fater Belbachir left to join Citigroup.

Headcount at the unit has grown by around 10% this year and it has made key hires including Christian Treuer as co-head of equity derivatives distribution in Europe, China East and Africa, Spyros Varoutsis, who joined JPMorgan as head of flow and delta derivatives one, and Peter Ward, head of electronic trading. In New York, Bill Bors and Scott Rice took on high-profile roles over the summer.

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READ Credit Suisse closes top brokerage after $5.5 billion Archegos hits asset-management goal

Barclays has a 5.5 percent share of global equities in 2020, according to Greenwich Alliance data, up from 3.8 percent five years ago. After a record first half of 2021, revenue in its share unit has grown 28% to £2.5 billion so far this year.

In early November, Barclays revealed that Jes Staley, its chief executive who led its investment banking expansion in the face of pressure from activists, had resigned after six years leading the investigation. investigating his relationship with convicted sex offender Jeffrey Epstein.

His replacement, CS Venkatakrishnan – known as Venkat – signaled Barclays’ continued focus on investment banking. Leech says that its equity unit is set to continue to expand in 2022.

“After significant growth in 2021, we have identified areas for expansion next year,” he said. Leech added that hiring is becoming more difficult amid the investment banking boom.

“The competition for talent is as fierce as I have ever seen it,” Leech said. “We want to stay ahead of that as much as possible – protect against attrition and add key people to the right areas. We are on a growth trajectory and are aiming to increase market share, which is attractive to many. ”

To contact the author of this story with feedback or news, email Paul Clarke

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