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Three new charts explaining the problems facing Barclays’ investment bank

Barclays strategy McFarlane

Barclays faces all these hurdles

We’ve been writing a lot about Barclays’ investment bank recently. This is partly because it’s been quietly hiring. It’s partly because it’s been quietly losing people. And it’s partly because Barclays is due to release its second quarter results on this Wednesday July 29, at which point we’ll get some idea of the strategic intentions of its new ‘executive chairman’ John McFarlane. 

We’re not the only people peering at Barclays ahead of its results. Chirantan Barua, analyst at Bernstein Research, has been pondering the investment bank’s past and future too. Barua thinks Barclays has come unstuck – especially in the all-important U.S.-based M&A and equities businesses. Here’s why…

1. Barclays equities business has been hammered by its disingenuous dark pool 

Remember Barclays’ dodgy dark pool? How it hired an executive who had been fired from Goldman Sachs and invited in all sorts of high frequency trading firms? Barua contests that this episode has had an enduring impact on Barclays’ equities market share, which has never been quite the same since.

As a result, Barua says Barclays has failed to benefit from the increase in equities sales and trading which has brought such a boost to rivals like UBS. 

Barclays dark pool

2. Barclays has mistimed its push into M&A 

Even though Greenhill’s new co-president thinks we’re still in the early days of the M&A recovery, Barua says it’s all downhill for M&A bankers from here. Barclays is therefore targeting M&A revenues at the wrong point in the cycle. Worse, it’s consistently lost market share since 2013.

M&A cycle off

Barclays M&A market share

3. The easy trading wins have already been won

Barclays trading

(Photo credit: Oskar Widerberg)

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