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Barclays (BCS) Taps Asia Hedge Funds to Boost Markets Business
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Continuing with its plans of reviving presence in the growing Asia markets, Barclays PLC (BCS - Free Report) sharply increases the business of financing trades for its Asia investors. The news was reported by Bloomberg, citing people with knowledge of the matter who asked not to be identified.
Barclays’ efforts to expand its markets franchise come at a time when rivals are scaling back from the business.
Per people familiar with the matter, the financing business’ share of overall Asia market revenues has doubled on a year-over-year basis.
Per Hossein Zaimi, the region’s head of markets at Barclays, the bank is trying to tap an increasing appetite from Asia quantitative and multi-strategy hedge funds for its prime financing business.
Notably, prime brokers cater to hedge funds, lending them cash and securities for trading. Since hedge funds trade more actively than mutual or pension funds, the relationship can be profitable.
While BCS is seeking to expand its financing business, some of its rivals have exited the business over the past several years because prime brokerage is still a risky business.
The main reason for Barclays to shift focus toward the financing business is to reduce reliance on the volatile trading business, which is expected to be negatively impacted in the near term amid the current global challenging operating environment.
Since the financing business is more predictable, Zaimi believes that the expansion of this business has helped BCS deliver its best-ever quarter this year in Asia.
Zaimi said that Barclays’ motive for expansion was to provide financing to global clients seeking access to the Asia markets, and to facilitate Asia clients buying global currency and fixed-income products denominated in U.S. dollars.
Apart from offering equity and fixed-income financing to prime clients, BCS has boosted offerings in corporate derivatives and macro products such as bond forward contracts.
Barclays has been trying to revive its markets business in Asia since 2018. Notably, in 2016, as part of a restructuring drive, the company 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.
However, it reopened an office in Australia in 2018 and Taiwan in 2022.
Last year, Barclays conducted strategic hires in its investment banking and wealth management businesses across Asia as the company was benefiting from a boost in trading operations.
As part of its expansion efforts, BCS has been planning hires in China, India, Singapore, Australia, Japan and Hong Kong.
Amid expansion efforts in Asia, Barclays is expected to face tough competition from its rival, HSBC Holdings (HSBC - Free Report) . HSBC has also been seeking to expand operations in the Asia markets, focusing mainly on Hong Kong and China.
HSBC intends to position itself as a top bank for high-net-worth and ultra-high-net-worth clients in Asia. The initiative will help the company strengthen its position in the region, which constitutes more than half of its operations.
Conclusion
Over the past few years, Barclays has been undertaking several restructuring actions to remain profitable. With the intention of simplifying operations and focusing on the core business, BCS has already restructured its business lines into two divisions, and divested/closed several non-strategic and less profitable operations globally.
Driven by these initiatives, Barclays is well-positioned for bottom-line growth in the near term.
Over the past six months, BCS shares have gained 1.9% compared with 7.5% growth recorded by the industry.
A better-ranked stock from the same space is Banco Santander, S.A. (SAN - Free Report) , currently carrying a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for the company’s current-year earnings has been revised 3.3% upward over the past 60 days. SAN’s shares have gained 16.4% in the past six months.
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Barclays (BCS) Taps Asia Hedge Funds to Boost Markets Business
Continuing with its plans of reviving presence in the growing Asia markets, Barclays PLC (BCS - Free Report) sharply increases the business of financing trades for its Asia investors. The news was reported by Bloomberg, citing people with knowledge of the matter who asked not to be identified.
Barclays’ efforts to expand its markets franchise come at a time when rivals are scaling back from the business.
Per people familiar with the matter, the financing business’ share of overall Asia market revenues has doubled on a year-over-year basis.
Per Hossein Zaimi, the region’s head of markets at Barclays, the bank is trying to tap an increasing appetite from Asia quantitative and multi-strategy hedge funds for its prime financing business.
Notably, prime brokers cater to hedge funds, lending them cash and securities for trading. Since hedge funds trade more actively than mutual or pension funds, the relationship can be profitable.
While BCS is seeking to expand its financing business, some of its rivals have exited the business over the past several years because prime brokerage is still a risky business.
The main reason for Barclays to shift focus toward the financing business is to reduce reliance on the volatile trading business, which is expected to be negatively impacted in the near term amid the current global challenging operating environment.
Since the financing business is more predictable, Zaimi believes that the expansion of this business has helped BCS deliver its best-ever quarter this year in Asia.
Zaimi said that Barclays’ motive for expansion was to provide financing to global clients seeking access to the Asia markets, and to facilitate Asia clients buying global currency and fixed-income products denominated in U.S. dollars.
Apart from offering equity and fixed-income financing to prime clients, BCS has boosted offerings in corporate derivatives and macro products such as bond forward contracts.
Barclays has been trying to revive its markets business in Asia since 2018. Notably, in 2016, as part of a restructuring drive, the company 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.
However, it reopened an office in Australia in 2018 and Taiwan in 2022.
Last year, Barclays conducted strategic hires in its investment banking and wealth management businesses across Asia as the company was benefiting from a boost in trading operations.
As part of its expansion efforts, BCS has been planning hires in China, India, Singapore, Australia, Japan and Hong Kong.
Amid expansion efforts in Asia, Barclays is expected to face tough competition from its rival, HSBC Holdings (HSBC - Free Report) . HSBC has also been seeking to expand operations in the Asia markets, focusing mainly on Hong Kong and China.
HSBC intends to position itself as a top bank for high-net-worth and ultra-high-net-worth clients in Asia. The initiative will help the company strengthen its position in the region, which constitutes more than half of its operations.
Conclusion
Over the past few years, Barclays has been undertaking several restructuring actions to remain profitable. With the intention of simplifying operations and focusing on the core business, BCS has already restructured its business lines into two divisions, and divested/closed several non-strategic and less profitable operations globally.
Driven by these initiatives, Barclays is well-positioned for bottom-line growth in the near term.
Over the past six months, BCS shares have gained 1.9% compared with 7.5% growth recorded by the industry.
Image Source: Zacks Investment Research
Currently, Barclays carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
A better-ranked stock from the same space is Banco Santander, S.A. (SAN - Free Report) , currently carrying a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for the company’s current-year earnings has been revised 3.3% upward over the past 60 days. SAN’s shares have gained 16.4% in the past six months.