All those BarCap hires have yet to make a difference
Not long ago, Barclays Capital said it wanted to hire 1,000 people this year. And not too long after that, it said 75% of them had been hired already. This being so, why are BarCap's revenues going backwards instead of forwards?
In a research note released yesterday, analysts at KBW point out that BarCap's "clean revenues" (excluding credit writedowns and the fair value of its own debt) were 33% lower in Q3 than they were in Q2.
The third quarter is never a strong one, but the reduction in BarCap's revenues was particularly dramatic (Goldman's fell 10%, Credit Suisse's fell 16%), and particularly notable given its push for world domination.
Right now, the only trace of all the hiring is on the bottom line: BarCap's cost income ratio rose to 83%, up from 75% in the first half.
However, all may not be lost. BarCap has said that the fourth quarter began well, and that revenues should be up. John Holmes, an analyst at KBW, points out that it also said that the new European cash equities business doesn't actually open for business until this month: "In the third quarter, you had all the costs associated with the build out, but none of the revenues."
In the current climate, BarCap's expanded investment banking business may also be spluttering slightly. The bank reportedly said revenues in the area were "lumpy."
