Barclays vows to keep hiring "selectively" for its investment bank
Barclays revealed today that profits at its corporate and investment bank (CIB) were down 41% year-on-year in the fourth quarter of 2022. The return on equity in the business shrivelled to 5.4%, which is below the cost of capital, but the bank plans to keep on recruiting all the same.
Speaking during today's investor call, Barclays' CFO Anna Cross said Barclays will continue to invest in both people and technology for its global markets and banking divisions and will hire talent "selectively" in the sectors it deems "appropriate for the future."
Barclays' annual report explained which sectors these are, stating that: "Investment Banking continues to invest in high-priority sectors, particularly in healthcare and in technology in the US and Europe." In markets, it says Barclays will continue to invest in prime brokerage, financing solutions, securitized products, emerging markets and parts of the rates and FX (macro business), alongside "electronic trading-led business... low touch and machine learning capabilities to drive efficiency and scale." Like UBS and Deutsche Bank, it's also busy "simplifying systems architecture."
As we noted earlier, Barclays has already been spied hiring credit traders in 2023. However, its head of European rates strategy quit for Millennium before bonuses were paid and Anil Atluri its head of global macro and securitized products distribution, left for Deutsche Bank in January.
Barclays' appetite for ongoing recruitment is a contrast to rivals like Bank of America that have slowed hiring in an effort to reduce headcount. The bank cut juniors in November last year and there were fears that another round of cuts would happen before bonuses. These haven't been forthcoming. "We fired one underperformer and that's about it," says one London banker, "But there might be deeper cuts in Q2 if revenues don't rebound."
Cross said today the pipeline of investment banking deals is strong but that for it to be monetised there will need to be a period of economic stability and that there are few signs of this yet. There are a few green shoots in the investment grade debt markets, she added, but nothing significant. Barclays registered £335m in writedowns on its leveraged loan portfolio last year, and Cross said leveraged finance commitments are being managed down and that the bank's appetite for risk was "somewhat curtailed."
While Barclays' enthusiasm for ongoing recruitment is reassuring in the circumstances, it's more muted than this time last year. In March 2022, then-co-head of investment banking Jean Francois Astier was declaring that M&A activity was "going to remain very high and very intense … all around the world.” Barclays was on a “hiring spree” which involved adding people “at all levels,” he proclaimed. Astier was recently moved into a different role within the bank and Barclays appointed two new heads of the division.
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