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Barclays I-Bank Shouldn’t Exist, Does, Is Thusly A Problem

What to do with an unloved business that fails all the Goldilocks tests but still contributes most your revenue?
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No, wait! Put it back!

No, wait! Put it back!

During his two-plus years at Barclays’ helm, Jes Staley has spent a great deal of attention right-sizing the ailing bank’s ailing investment banking unit. This has involved a whole lot of cutting, and then cutting some more, and then still more. But there’s also been a focus on doubling down, especially in the U.K., often Thunderdome-style to separate the men from the boys (and, of course, the women). You know, because however bad Barclays International is, it does account for two-thirds of Barclays’ total revenue.

And what does Staley have to show for all of this? Well, a semblance of progress, to be sure, but also a bank that continues to make no sense thanks to an investment bank that that makes even less sense.

Does a leading U.K. retail and commercial bank belong with a mid-ranking U.S.-focused investment bank? If you were pitching this as a new business, you’d surely struggle to find backers….

Barclays is both too big and too small. With a book value of almost £42 billion, the international arm would be too much for rivals like Credit Suisse , or Deutsche Bank…. But Barclays is also too small: investment banking and securities trading revenues are gravitating to the very biggest players. Investment banking clients either want something that is extremely cheap and efficient, which plays into the hands of the top-five U.S. banks, or something that is highly specialized, which means much smaller boutiques.

Barclays: Too Big For a Deal, Too Small to Compete [WSJ]



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