Yee-haw for Barclays Asian blocks business
Barclays is seeking a stronger footing in Asia Pacific ECM, with the creation of a new role of head of blocks origination. The bank has struggled to make headway in terms of market share in the region, but its strong Japanese franchise, accompanied by its new emphasis on the more profitable blocks business, shows the firm is moving in the right direction, reports Rashmi Kumar.
Barclays this week named Jack Yee as head of blocks origination for Apac, bumping up Daniel Wosner to head of equity syndicate to replace him. Yee has shifted from syndicate to ECM, which sits in investment banking at Barclays.
One reason Barclays has created a new blocks head is to take advantage of the bigger opportunities and profits available in that side of the ECM business, said sources at the firm.
“The block business is pretty profitable,” said one headhunter. “Lots of banks and people are increasingly looking at this side of ECM and Barclays has to also beef up. It is looking to move up the food chain and has the wherewithal to do so.”
Globally, the investment bank boasts a strong equities franchise — a legacy of its acquisition of the Lehman Brothers' US business and something that it hoped would enable it to build a leading ECM franchise in other regions. Last year, Dealogic gave the firm bookrunning league table credit for 302 ECM transactions, putting it among the top 10 banks. But in Asia, Barclays only broke into the top 60 in 2013 and last year was among only the top 50.
Shuffling the ECM team reflects the bank’s ambitions to creep up the ladder in Asia, said Barclays sources. They are adamant that it is less to do with gaining league table credit and more with giving shareholders good returns.
Barclays also underwent a global restructuring in May last year, which led to downsizing of personnel and risk-weighted assets. At the same time it introduced a new origination-led model, which is slowly taking shape in Asia, sources said.
“Barclays is a global bulge-bracket bank,” said the headhunter. “But in Asia it is not. It’s only been here for around three and a half years and it takes about five years for the equities and ECM business to mature.
"Barclays is getting there. It will be a big giant that will steal market share from many other banks.”
The bank's journey hasn’t been easy. As part of the revamp, some 7,000 jobs cuts are expected globally by 2016 and Barclays is aiming to reduce the accountability of its investment bank to no more than 30% of its risk-weighted assets from around 50%.
Under the leadership of Tom King, chief executive of the investment bank, new top-level teams have also been installed. Among the changes were the installation of Reid Marsh and Patrick Kwan as co-heads of Asia investment banking in mid-2014, moves that are expected to hold the firm in good stead for future growth.
“They have done an amazing job in the last year by hiring good people and putting a strong team in place,” said a second headhunter. “And it shows, because their revenues are moving in the right direction.”
One region that Barclays is expected to rely on for growth is Japan, said market watchers. The firm’s Japan ECM franchise was strong in 2013, giving it the 10th spot on Dealogic’s bookrunning league table. And although Barclays didn’t feature in the top 10 last year, there are chances it will clinch a higher position in 2015.
“Barclays has no real franchise in Asia except in Japan,” said a rival senior ECM banker. “So when it names someone the head of blocks [origination], I’d assume it means for Japan. He’ll chase the rest of Asia too, but the potential for growth for them will be Japan, where there will likely be more block trades this year.”
The Japan block business is expected to pick up with the introduction of new rules to improve corporate governance among Japanese companies that maintain numerous cross shareholdings. The new regulations would force firms to start shedding their stakes in listed entities, said sources.
“If there is a change in regulation, then Japan can see a wave of blocks coming to the market,” said the senior banker. “If that happens, then Barclays can steal some market share because of its strength there.”
Hong Kong-based Yee first joined Barclays in 2011 as head of equity syndicate for Apac, before which he was head of equity syndicate for Asia ex-Japan at Nomura. Sources at Barclays said Yee’s skillset was aligned to origination as he helped bring in deals last year. The bank typically hard-underwrites the majority of the blocks it runs, they added.
Wosner, who was a director in the Apac syndicate team, replaces Yee and will take charge of marketing, distributing, pricing and allocating ECM transactions. He will report globally to Joe Castle, head of equity syndicate, while Yee will report to Jorge Munoz, head of ECM for Apac.