Barclays has been growing headcount in equities sales and trading by 10% over the course of 2021 to support a planned expansion in these activities, the latest example of how the UK bank is beefing up its global markets division.
The significant net increase in front-office personnel is spread across a range of roles and regions, according to Paul Leech, co-head of equities at the bank, and comes at a time when Barclays is looking to increase its presence in a number of areas, including European flow trading and corporate equity derivatives.
"We're investing in people, we’re investing in technology and we’re investing financial resources,” said Leech. “It's a material increase in headcount aimed at continuing momentum and building on our revenue growth in equities.”
The plans form part of a broader strategy under Barclays’ chief executive Jes Staley to grow the corporate and investment bank. Staley is increasingly confident Barclays can take on the big five US banks in trading and advisory – and provide a European option that some clients want.
Barclays reported one of the largest annual increases in trading revenues last year among its peers, seeming to vindicate Staley’s decision to keep investing in these higher-risk activities in the face of a prolonged battle with activist investor Edward Bramson (which ended in May).
Staley identified equities as a growth area in the bank's latest quarterly results, drawing a contrast to other European firms that have cut back these activities such as Deutsche Bank, HSBC and – more recently, following losses related to Archegos Capital Management – Credit Suisse.
Barclays remains some way off the top US equities banks in terms of revenues. Goldman Sachs, for instance, made US$6.3bn in the first half of the year – well over double Barclays’ total.
But the UK bank has been making progress in recent years, increasing its equities market share from 3.8% in 2017 to 5.5% in 2020, according to Coalition Greenwich data. It followed that up with a 38% annual rise in equities revenues in the first six months of 2021 to £1.7bn – its best ever H1.
A strong market backdrop has helped equity structured products businesses this year, but Leech noted it has also been a good year in flow trading thanks to one-off events such as the frenzy around meme stocks like Gamestop in the first quarter.
“While macro levels of volatility haven’t been as elevated as last year, there have been attractive volatility opportunities through idiosyncratic events and low levels of realised correlation over the course of the year,” he said.
Flow time
An equity derivatives trader by background, Leech joined Barclays in early 2020 following a 25-year stint at JP Morgan to run European equities under Fater Belbachir. He added to several senior bankers poached from JP Morgan, where Staley used to run the investment bank, and which is one of the big three equities firms alongside Goldman and Morgan Stanley. Leech was soon promoted to co-head equities alongside Todd Sandoz in mid-2020 after Belbachir left for Citigroup.
Leech and Sandoz are continuing the work Stephen Dainton (now deputy head of markets) started in late 2017: bringing together Barclays’ structured products-focused European business and its flow-focused US platform, which it acquired from Lehman Brothers after the 2008 crisis.
The strength of that US flow platform helped Barclays weather the pandemic-induced market volatility in the first half of 2020 – a period that illustrated all too vividly the importance of a balanced business model in equities.
French banks heavily weighted towards structured products suffered amid soaring volatility and mass dividend cancellations, even as flow-trading desks at other firms flourished when investors scrambled to switch up positions.
“In volatile and challenging market conditions like last year, our clients need a full-service offering, and likewise for us, that diversification is really important from a risk management point of view,” said Leech.
Hires
Barclays has made use of internal expertise in its equities build-out. For instance, it moved and promoted some of its top traders and salespeople from London to New York and vice versa in mid-2020 with the aim of expanding its structured products offering in the US and growing flow trading in Europe. But it has also made a number of important hires this year to bolster its ranks.
Christian Treuer, co-head of EMEA equity derivatives distribution, joined in January to help diversify its offering beyond retail structured products in the region. Meanwhile, Cedric Veylon and Spyros Varoutsis joined from JP Morgan to head EMEA flow derivatives trading and delta one in London, respectively.
Other notable hires of late include Bill Bors in New York as a senior sales trader, Anita Tanna as head of EMEA generalist and specialist cash sales, and Girish Mithran as head of program trading risk in Asia. That follows the addition of Florent Rodier as head of exotic derivatives in Asia last November.
Elsewhere, corporate equity derivatives – a business Leech helped build at JP Morgan – is another area Barclays is targeting. “We’ve been encouraged to see continued progress in the corporate equity derivatives volatility space, where we’ve been involved in some very significant transactions this year,” Leech said.