The new most dangerous job(s) at Barclays
As is often the case with these things, one of the most difficult and dangerous jobs at Barclays this year was handed to a woman seven months ago.
London-based Na Wei was made global co-head of leveraged finance with US-based Tom Blouin in April. Both have been at Barclays for most of their careers. Both are now facing a particular challenge holding their business together as Barclays squeezes the capital allocated to the investment bank.
As we reported yesterday, sources at Barclays told the Financial Times that the investment bank is being commanded to generate sustainable returns of between 14% and 15% a year, something that has almost never happened. Ideally, it should also reduce risk weighted assets by up to £20bn after expanding them by roughly the same amount in a two-year period.
Neither edict sounds promising for capital intensive jobs in leveraged finance and, as if by magic, Bloomberg is reporting today that Barclays executives have already 'instructed bankers to review ties to certain financial sponsors that have used [the] bank to finance their deals without taking advantage of the firm’s advisory capabilities.' In other words, Barclays is squeezing its leveraged finance team.
It's easy to see why. In the first nine months of this year, the bank ranked fourth globally for leveraged finance revenues according to Dealogic, and made $249m. Last year, however, Barclays registered £335m in writedowns on its leveraged loan portfolio. The business was under pressure even before the aspiration to generate 14%-15% returns, which Bloomberg suggests will be implemented as soon as February '24. Earlier this year, Barclays CFO Anna Cross said leveraged finance commitments were being managed down and that the bank's appetite for risk was already "somewhat curtailed."
This leaves Wei and Blouin in a difficult position with a team already unsettled after the beloved JF Astier, who'd led the business for over a decade (and was co-head of the investment bank), moved to become head of financial sponsors earlier this year.
Astier's move, which coincided with the unpopular crowning of Cathal Deasy as co-head investment banking, was seemingly engineered by Paul Compton, Barclays' historic COO, who is now running the investment bank. Compton, who cut his teeth as chief administrative officer at JPMorgan, has long been viewed with suspicion as a non-revenue generating cost-cutter, by Barclays' bankers and traders. He now has every reason to indulge that passion.
Needless to say, it's not only leveraged finance that's under pressure. Much like Citigroup, Barclays is also looking at extracting layers of management. “We are taking a number of actions to simplify and reshape the business, improve service, and deliver higher returns,” Barclays told Bloomberg. “This includes changes to our headcount as management layers are reduced and the group improves its technology and automation capabilities.”
At Citi, the reduction in management layers means fewer co-heads. This might be another reason for Wei and Blouin to look over their shoulders.
Away from the front office, Barclays is also cutting 900 jobs in the back office. MDs in risk seem to be leaving of their own accords.
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