Last month, ill-informed speculation grew to a crescendo that Antony Jenkins, the newish chief executive of Barclays, who spent his career on the retail side of the bank, would take the axe to the investment banking division. After all, UBS’s shares had been re-rated after the bank announced a wide-scale deleveraging of the investment bank, particularly those parts of the FICC division that had large amounts of capital tied up by counterparty risk exposure in long-dated derivatives.
But UBS was a marginal player in FICC that had got out in 2008 and 2009, got back in again in 2010 and never quite enjoyed the prominence the bank has in equities. Barclays is different. It is a market leader in FICC, as its strong showing in Euromoney’s rates survey indicates. And Jenkins chose instead to re-emphasize his commitment to the business, which is a driver of earnings at Barclays’ biggest division.
The troops, never short of confidence, are enthused. For the biggest firms, rates remains a good business, with margins not yet as compressed as in foreign exchange and volumes supported by the vast increases in government debt issued in recent years.
