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Barclays (BCS) Plans Strategic Hires to Rebuild Asia Presence

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Following a round of job cuts across Asia as part of a restructuring drive in 2016, Barclays PLC BCS is now planning to hire staff in its investment banking and wealth management businesses across the region in 2022. The move is part of the bank’s efforts to revive its presence in the growing Asia markets.

Five years ago, under the leadership of its former CEO, Jes Staley, Barclays conducted a series of job cuts that closed doors for its cash securities business across Asia. Back then, the British lender had scaled back operations in Australia, South Korea and Malaysia while keeping its prime brokerage and derivatives business in the region.

But, now, as the bank is benefiting from a boost in trading operations, it is planning on rebuilding its presence in the Asia markets with special focus on China, India, Singapore and Australia, per Jaideep Khanna, the head of the company’s Asia-Pacific region and India CEO.

In the last eight months, Barclays has hired nine key executives in Asia.

Apart from the regions mentioned above, the bank is planning hires in Japan and Hong Kong as part of its expansion efforts.

Khanna stated, “We are profitable in the region and I fully expect it to continue in 2022. Our focus is going to be consistent - try and stick to the areas where we are strong. There are enough areas for us to drive returns today and that’s what we are focused on.”

He added, “Barclays in 2021-22 is a very different business that existed prior to 2016. It is much more focused now, generating better returns with more local knowledge and more self-awareness.”

Notably, outside the U.K., Barclays has the maximum number of employees in India. This August, the bank said that it is seeking to invest more than $400 million in India to grow its corporate, investment and wealth management businesses.

Khanna stated that Barclays is “probably the only international bank of our size and stature that has the regional CEO based out of India - that gives a sense to how important India is.”

Amid expansion efforts in Asia, Barclays is expected to face tough competition from its rival HSBC Holdings HSBC. HSBC has also been seeking to expand operations in the Asia markets, with its main focus on China. HSBC is already ahead of its hiring targets for the China retail wealth management business.

This February, HSBC announced that it is on an expansion spree and plans to hire 5,000 wealth planners in Asia over the next five years. Along with this, it announced plans to inject $3.5 billion worth of capital in the region. Approximately two-thirds of the amount will be used to bolster the bank’s distribution competencies via new hires and technology improvements.

Further, HSBC announced plans of shifting capital from the underperforming businesses in Europe and the United States to invest $6 billion in Asia over five years. The capital will primarily be used to amplify its wealth management business since management intends to target wealthy clients in mainland China, Hong Kong, Singapore and other parts of the region.

Notably, in China, Barclays currently has a very small presence as it operates through a single branch and only one representative office. Thus, peers like UBS Group AG UBS and Citigroup C, which have established a strong hold over China, are expected to give Barclays a tough time in trying to beef up its operations in the country.

In China, Citigroup plans to form a wholly-owned investment bank and has recently submitted its application for a license to the China Securities Regulatory Commission. Further, Citigroup is mulling over applying for a futures license in the coming months. It is expected to hire more than 100 people in China over the next two years in order to support its onshore expansion plans.

Given that China’s $53-trillion financial market is now open to foreign firms following the removal of ownership restrictions since 2018, several global banks have been rushing to capitalize on the lucrative prospect.

UBS Group has been mulling over increasing its stake in the China securities joint venture. The Swiss banking giant, which became the first foreign bank in 2018 to get a nod for majority control of a joint venture in China, has been long-planning to acquire another 16% of the pie, boosting its control to 67%.

Unlike its peers, UBS Group does not want full ownership of its joint venture in China. In fact, UBS Group opts that it is better to keep the asset management arm of the Beijing government as a shareholder because of the valuable networks it can equip with in China.

Our Take

Barclays has been undertaking initiatives to improve efficiency over the last few years. The efforts have been bearing fruit, as evident from a fall in the company’s total expenses. Moreover, the bank’s efforts to simplify operations and focus on core businesses have been impressive. It has restructured its business lines into two divisions and has divested/closed several non-strategic and less profitable operations globally.

Driven by these initiatives, Barclays remains well positioned for bottom-line growth in the near term.

Over the past year, shares of Barclays have gained 32.3% compared with 12.1% growth recorded by the industry.

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Currently, Barclays carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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