Barclays’ investment bank stuttered in the first quarter, failing to follow rivals’ sharp dealmaking gains as revenue from fixed income trading tumbled by 21%.
The UK lender, which has been looking to reduce reliance on its investment bank under a strategic shift unveiled in February, brought in revenue of £3.3bn for the unit, which was slightly under market expectations.
Its fixed income trading unit accounted for £1.4bn of that revenue, sliding by 21% for the period. Despite a 25% uptick in equity trading fees, overall global markets revenue at Barclays was down 8%.
Its investment banking fees were up 2% to £617m, a much smaller gain than double digit jumps at rivals. Barclays’ M&A unit was down by 30% for the period, and its leading debt underwriting business gained 18% to £401m, again a smaller rise than many peers.
Wall Street banks saw a rebound in investment banking fees during the first quarter, with equity and debt underwriting pushing large percentage gains at Bank of America, Citigroup, Goldman Sachs, JPMorgan and Morgan Stanley.
European investment banks are likely to see sharper gains as their investment banking businesses are more dominated by debt capital markets work. Deutsche Bank’s origination and advisory business posted a 54% gain during the first quarter, driven by debt underwriting.
While M&A volumes jumped 30% during the first three months of the year, according to data provider Dealogic, fees have yet to return, with most US banks posting declines.
Barclays’ overall revenue of £7bn was slightly ahead of analyst expectations, however, and down by 4% compared with the same period last year. Profit of £1.6bn was also ahead of market consensus.
“We are focused on disciplined execution of the plan that we presented at our investor update on 20 February,” said Barclays chief executive C. S. Venkatakrishnan.
Barclays has been hiring senior dealmakers in Europe and the US as it looks to rebuild after a series of exits. Most recently, it brought in Stephen Pick from UBS as head of its Emea M&A division and Rafael Abati as head of its energy transition dealmaking team in the region.
However, the bank is also cutting costs, with plans to cut £2bn worth of expenses unveiled in a February strategy update. It will cut hundreds of jobs across its investment banking, markets and research division as part of the plans.
Barclays ranks sixth by investment banking fees so far this year, according to Dealogic, with a 3.4% market share.
In its full-year 2023 results in February, Barclays named new leaders of its investment bank. Stephen Dainton was promoted to head of investment bank management, while Adeel Khan was named sole head of its markets unit. Cathal Deasy and Taylor Wright remain in charge of its dealmaking division.
Write to Paul Clarke at paul.clarke@dowjones.com
