There's a new favourite group of people at Barclays' investment bank. It's not so long ago that Barclays CEO Jes Staley was praising Adeel Khan, Barclays' head of credit trading for his efforts in growing the fixed income trading business. Now Staley is extending his plaudits to people in equities.
"Kudos to the team," said Staley of Barclays' equities professionals during this morning's investor call. "I'm really pleased about our performance in equities," he added later. Not without good reason.
Barclays' equities sales and trading business has done exceptionally well this year. CFO Tushar Morzaria says it's seized market share from rivals. He seems to be right; especially when it comes to seizing market share from Credit Suisse.
Equities sales and trading revenues at Credit Suisse were down 1% in Swiss franc terms in the first half of 2017 compared to the first half of 2018. At Barclays, where revenues are measured in pounds sterling, equities revenues rose 30% over the same period. While Barclays did well, Credit Suisse seemingly did not.
The discrepancy in performance is likely to be doubly disconcerting for Credit Suisse because a not insignificant number of its former equities professionals have moved to Barclays. Most significant among them is Stephen Dainton, whom Barclays hired from CS last August as global head of equities, but there's also Nas Al-khudairi, Credit Suisse's former star head of electronic products, or Matt Pecot, a former equities MD at Credit Suisse in Asia (who joined Barclays as head of equities for APAC), or Neil Staff, who's joining soon as head of exotics and derivatives trading for EMEA, or Jan Asboth, a former Credit Suisse electronic equities salesman who came to Barclays via Macquarie. The list goes on.
Needless to say, Staley didn't cite the Credit Suisse hiring spree as the reason for Barclays' success. Instead, he said it was down to a combination of additional capital for the equity financing business, strength in flow equity derivatives, investment in electronic equities trading - and to a new trade routing system which has significantly increased electronic equities volumes.
None of this is intended to rain too heavily on the equities parade going on at Credit Suisse, where CEO Tidjane Thiam declared himself happy with equities results this week and said that equity derivatives revenues were especially febrile in Q2. Credit Suisse has, of course, been doing some equities hiring of its own under ex-UBS head of equities Mike Stewart. And although Credit Suisse's equities sales and trading revenues fell in the second quarter compared to the previous year, they fell by less than Deutsche Bank's did.
Of course, there's always the possibility that Barclays' brilliant quarter in equities has less to do with all its recent hires and tech investments than with geography. Barclays' equities business is predominantly comprised of the ex-equities business at Lehman Brothers and is therefore heavily skewed towards the U.S.. As the chart below shows, most U.S. banks' equities businesses had a good second quarter (Goldman Sachs excepted). The moral of the story may yet be that if you want to work in equities now, make sure you choose a bank that's strongly exposed to the American market.
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