Many banks could press strong claims to be western Europe’s best investment bank for the first year of Covid – when all issuers desperately needed financing, corporations and sovereigns sought strategic advice and investors required ideas and liquidity to rapidly adjust market exposures.
As ever, the leading candidates included the big five US firms that traditionally dominate the equity capital markets league tables and M&A advisory, and the home market banks that dominate in debt capital markets and loans, notably BNP Paribas, which had a particularly strong case in light of its leadership in sustainable finance. Deutsche Bank also saw strong revenue growth as its restructuring bore fruit.
The winner doesn’t top any of the league tables, but it ranks handily in all of them. It seems fitting to recognize Barclays for its resurgence in the year when long-time activist investor Edward Bramson finally gave up his fight to persuade shareholders and the board to ditch the investment bank.
They will be glad they held firm. For the first quarter of 2021, Barclays' corporate and investment bank achieved a return on tangible equity of 17.9%, up from 12.5% for the first quarter of 2020. In the same period, the banking business reported the highest ever fee quarter, with revenues in Europe, Middle East and Africa (EMEA) up over 100% versus 2020 and up 61% versus 2019.
This comes after the unit boosted profits for the whole of 2020 by 35% and almost doubled the return on tangible equity.
The bank has distinguished itself with some key transactions.
Barclays acted as joint financial adviser, sole sponsor and corporate broker to National Grid on two industry-leading deals: the £14.2 billion acquisition of Western Power Distribution and the $5.2 billion sale of the Narragansett Electric Company. Together these transactions pivot the company’s UK portfolio towards electricity, ensure a scale position in electricity distribution and significantly enhance National Grid’s central role in the delivery of the UK’s net zero targets.
Although it ranks below BNP Paribas in debt capital markets overall, Barclays boasts some important strengths, for example, as an arranger for sovereign supranational and agency issuers.
Most notably, Barclays led Spain to market with a market record €15 billion 10-year bond, attracting the largest book attained by any issuer at the time for a single tranche transaction of €96.5 billion with orders from 560 accounts.
In October 2020 it lead managed the European Union’s debut SURE bond, an €17.5 billion dual-tranche issue that broke new records for order book size.
As the initial market panic over Covid subsided, Barclays led the reopening of the funding markets for financial institutions with senior deals for issuers such as Nordea in euros and covered deals from Caffil and BPCE.
In equity capital markets, Barclays delivered a number of important transactions including: ADO’s €450 million rights issue – the first rights issue in Germany post-Covid; Nexi’s €1.3 billion secondary placing – the largest financial sponsor accelerated bookbuild on record in Italy; Allegro’s $2.3 billion IPO – the second largest IPO in Europe in 2020; and the €2.3 billion IPO of Vantage Towers for parent Vodafone.
Since he became chief executive in 2015, Jes Staley has stuck by the investment bank and invested in it when many were urging him to do the opposite. Staley told Euromoney in May: “We took a huge contrarian position with the investment bank, but I knew that if I got lucky or was right, it would be a good run.”