Thursday, October 4, 2012

Barclays plans shake-up as regulatory pressure grows


Barclays said Thursday that it is reorganising its investment banking operations to try and boost returns at the UK bank's main revenue generator in the face of increasing regulatory pressure.

In an internal memo Rich Ricci, the head of Barclays's investment bank, said the group will create regional heads to help drum up business around the globe. Mr. Ricci also announced a single executive committee for the corporate and investment bank. The group's fixed-income, commodities and currencies division, or FICC, will merge with Barclays's equities business into a single markets division in an effort to increase cost savings, Mr. Ricci wrote.

"With markets remaining challenging we must continue to control our own destiny," Mr. Ricci wrote in the memo. "These changes evolve our operating model to ensure we do that with a clear focus on clients, strong controls and an efficient Executive Committee."
 
Several members of the bank have been moved to new roles. Eric Bommensath, who ran FICC and trading in Europe, will head the newly formed markets division. Jerry Donini, who previously ran the equities business, will become chief operating officer for corporate and investment banking, the memo said. Skip McGee, who leads the bank's advisory businesses, now also becomes the chief executive of corporate and investment banking in the Americas.
 
The reshuffle also sees several staff exit the organisation. Iain Abrahams, who became an executive vice chairman of Barclays, last year, will leave the bank at the end of 2012. Ivan Ritossa and Guglielmo Sartori di Borgoricco will also depart at the end of the year, and will step down from the executive committee.
 
The management shake-up is the latest move by Barclays to bolster its businesses in the wake of an interbank lending scandal that ripped through its management ranks this summer. In July Mr. Ricci became the sole head of the group's investment bank after co-chief executive Jerry Del Missier was named Barclays's chief operating officer. Mr. Del Missier later quit after the bank was found by several regulators to have tried to rig interbank lending rates.
Barclays's new chief executive, Anthony Jenkins, has stated his attachment to the group's investment banking operations, but he has signalled that the group's retail business will play a bigger role at the bank.
 
On Tuesday the bank announced that the heads of its credit card and retail banking business will join the group's executive committee.
 
Like many of its peers, Barclays's investment banking division has suffered of late as the European crisis kept clients on the sidelines. In the first six months of the year, Barclays's corporate and investment banking division saw revenues slip 6% to 2.16 billion pounds ($3.48 billion) compared with the same period a year earlier.
 
The division also faces increasingly tough regulatory hurdles. Like several U.K banks Barclays will likely have to segregate its investment banking operations from its retail activities in the coming years under new laws.
 
Barclays declined to comment on the matter beyond what was in the memo.