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Barclays Investment Banking Unit to Expand Operations Again?

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After years of divesting operations across the globe to focus more on the U.K. and the U.S markets, Barclays’ (BCS - Free Report) investment bank intends to re-enter South Africa and South Korea. This was reported by the Financial Times citing persons familiar with the matter.

Barclays’ plan to expand investment banking is in the initial stage, with South Africa and South Korea identified as two important markets for rebuilding the business. The bank intends to open a representative office in South Africa with an aim to provide banking services to the clients.

Notably, the company will have to satisfy the terms of the multi-year non-compete agreement with Barclays Africa before taking any decision. The bank had sold majority of its Barclays Africa stake as part of efforts to improve efficiency and simplify operations.

For South Korea, Barclays has not yet applied for the new banking license. The company had exited the country in 2016 as part of its strategy to cut costs through global restructuring and focus on lucrative markets of Hong Kong, Singapore and India in the region.

This will not be for the first time that Barclays plans to re-enter a country with an intention of expanding its business. In April 2018, the company re-opened its office in Australia and provides capital markets and advisory services. Notably, it had exited the country in 2016.

Barclays undertook several measures to control expenses and focus in primary markets. Also, the bank completed the ring-fencing of its investment banking operations in April 2018. All these are expected to support profitability.

However, pressure on revenues remains a major concern. Barclays’ core operating performance is unsatisfactory. Further, unprecedented adverse impact of Brexit and low interest rate environment in the U.K. will likely hurt the company’s financials in the quarters ahead.

Shares of Barclays have lost 6.2% in the past year compared with the industry’s decline of 5.4%.

Currently, Barclays carries a Zacks Rank #4 (Sell).

Better-ranked stocks in the same space include Bank of Montreal (BMO - Free Report) , The Toronto-Dominion Bank (TD - Free Report) and Credicorp Ltd. (BAP - Free Report) . All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Bank of Montreal’s earnings estimates for fiscal 2018 have been revised 1.5% upward, over the last 60 days. Its shares have gained 4.7% in the past year.

Toronto-Dominion has witnessed a 1.2% upward earnings estimates revision for fiscal 2018, in the past 60 days. Moreover, its shares have gained 13.5% over the past year.

Credicorp Ltd’s earnings estimates for 2018 have moved nearly 1% upward over the past 60 days. In the past year, the bank’s shares have rallied 23.2%.

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