Barclays seems to recognize that it has issues to address in its U.S. equities trading business. As we were first to report last month, Joe Corcoran, global head of markets and head of markets Americas has stepped aside and Tim Throsby, the new head of Barclays’ investment bank is taking personal control of whatever happens next. Something needs to be done: Barclays bought a strong U.S. equities business from Lehman Brothers but many of the ex-Lehmanites have left and global equities trading revenues at the bank were down 10% year-on-year in the first quarter.
Even before Throsby moved in, Barclays insiders say Corcoran had applied some muscle to the issue. In the past few months, he reportedly engaged the services of John Neary, founder of 3000Kings LLC and a consultant to the financial services sector.
Neary has pedigree. Before setting up 3000Kings in April 2013, he spent seven years at Morgan Stanley, latterly as global head of multi-asset portfolios and previously as head of equities trading for the Americas. Before that, he spent nearly fourteen years at Goldman Sachs, where he was head of equity portfolio trading for the U.S. At Barclays. he’s said to be working on “special projects.”
Barclays didn’t respond to a request to comment on Neary’s involvement, but the bank appears to be in good hands.
Insiders say turning around Barclays’ U.S. equities business won’t be easy, however. Under Mike Di Iorio, the former global head of equities sales who quit for Credit Suisse in May, they argue that Barclays focused too heavily on equity derivatives. Eric Schlanger, the head of U.S. equities, has allegedly cut a lot of cash distribution and trading staff, and the electronic equities business has never recovered from the 2014 dark pool scandal. “Barclays has been ditching people and struggling with the same issues as a lot of other banks – do you focus on the dark pool or the central risk book?”, says one MD, speaking off the record. “The problem is that there are a lot of costs associated with running a dark pool and with an electronic trading business in general, and it’s difficult to justify them when margins are poor and commissions are compressed.”
Someone – be it Neary or Throsby himself – needs to fix this. Earlier this month, Barclays lost Joe Mecane, its global head of electronic equities, to Citadel Securities, leaving a gap at the top of that business. The good news is that Barclays already has a deep bench: in October last year it hired Bob Gasser, formerly of ITG as head of strategy for pre-market trading technology; it also still employs Mecane’s predecessor, Bill White, although White’s current function is unclear. The bad news is that Barclays’ problems seem to go deeper than personnel.
Barclays’ insiders nonetheless have high hopes for the bank’s U.S. equities business under its new management. Not everyone is convinced though. As we reported earlier, J.P. Morgan’s banking analysts are predicting that revenues will fall by another 9% at Barclays’ equities trading business this year, more than at any other bank.