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Barclays said something unexpected about its business in Asia

After more than three years of relentless job cuts in their function, Asian equities traders have been given a glimmer of good news from an unexpected source: Jes Staley, chief executive of Barclays. Staley told the Financial Times that his bank could one day re-enter Asian cash equities trading. “It may be the first part of our strategic restructuring that we reverse,” he said.

Staley, it must be remembered, was the man who in January 2016 decided to ditch Barclays’ research, sales and trading operations in high-touch Asian cash equities. The closure, which reportedly cost more than 200 jobs, was one of Staley’s first major decisions after he took over the running of Barclays in December 2015. Barclays retained its electronic execution-only services in cash equities as well as its Asian derivatives and prime brokerage teams.

Staley’s 2016 decision also made Barclays (along with Standard Chartered) one of the first firms to cut back in Asian equities, but others soon followed as banks struggled for profitability in the sector. Credit Suisse, for example, culled dozens from its regional equities operations in 2017. The redundancies arguably reached a peak last quarter when BNP Paribas cut most of its Asia equity research team, and Morgan Stanley and Nomura trimmed their Asian equities operations. In early July, Deutsche Bank announced it was shuttering its Asian equities business, alongside those elsewhere in the world.

A spokesperson for Barclays declined to comment on why Staley has so publicly opened up the possibility of a return to Asian high-touch cash equities, and Staley himself has not provided a timescale. The potential move is in keeping, however, with statements from Barclays top management (including Staley) in July that growing the Asian business is now critical to Barclays ongoing efforts to increase the global market share of its corporate and investment bank (CIB). The Asian markets team within CIB wants to take on about 60 people (about a 10% to 11% rise over its current headcount), with a focus on FX trading, emerging markets trading in Singapore, and credit trading in Hong Kong, Stephen Dainton, head of global markets at Barclays, told Reuters.

A return to cash equities is also in keeping with a bullish update on Asian equities posted by Barclays private bank in July which argues that “bad news” such as US-China trade tensions has already been priced into Asian equity valuations, leaving room for a rebound. “I suppose Jes Staley would consider returning to cash equities because of the higher volatility in the market, which may cause higher volumes,” adds Hong Kong-based trader-turned headhunter Matt Hoyle.

If Barclays were to reopen its Asian cash equities unit, there are likely to be some new sales, trading and research roles created as a result, mainly in Hong Kong, says another Hong Kong-based recruiter, who asked not to be named. While the UK bank has a history of hiring and firing in Asian cash equities, this would not dissuade most candidates from applying, says the recruiter, adding that recent layoffs mean there will be plenty of job seekers in the market for the foreseeable future.

Despite this, the very top-performing equities professionals wouldn’t necessarily flock to join Barclays. “The best equities people are always in demand, so I don’t think Barclays would have the pick of the best,” says Hoyle.

Moreover, while a reopened Barclays cash equities unit would recruit people, there’s unlikely to be a big hiring spree. The firm would want to keep costs under control, at least in the short term, while the business beds in. “I wouldn’t expect that many new jobs would be created, due to the trend towards automation in equities,” says Hoyle.

Barclays would, however, probably need to hire more equities technologists to drive the automation of its trading system – and some of them would need to be based in Hong Kong, close to the traders, says the Hong Kong-based recruiter. As we reported last month, equities technologists are in high demand in Hong Kong at banks such as JP Morgan and Goldman Sachs as Asia plays catch-up with the US and Europe in electronic trading.

Barclays’ existing markets division in Asia has recently been shaking up its senior ranks. It hired Matt Pecot from Credit Suisse as head of equities APAC in May 2018 and expanded his role this July to lead APAC markets (covering equities, credit, macro and financing). In January, Barclays strengthened its electronic execution-only cash equities team – which survived the 2016 cuts – by relocating Matt Toms from London to Hong Kong to lead electronic and program trading for APAC. And in the equities derivatives team, which has also continued to operate post-2016, Nicolas Reille joined from Natixis as head of APAC equities structuring in April.

Image credit: Getty

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AUTHORSimon Mortlock Content Manager

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