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Morning Coffee: Barclays’ peculiar promotion ahead of strategy update. French bank confesses it lost its soul for 5 years

“Personnel is policy”, as the saying goes – if you want to know what an organisation is planning, look at who is being promoted and why.  But it doesn’t always work that way.  Sometimes, other factors intervene and personnel moves can be a downright misleading guide to strategy.  It seems that Barclays' leveraged finance business, where Na Wei has just been promoted to sole head, might be one of these unusual cases.

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The leadership of this business unit has been a bit of a saga over the last twelve months – in April last year, Wei was made global co-head alongside Tom Blouin, at a moment when “hung” leveraged transactions were causing a certain amount of trouble for the bank’s capital measures.  It was noticed in November that Barclays seemed to be talking about reducing its risk appetite and “managing exposures down”.

If it wasn’t for one thing, this would be a very explainable personnel move.  Na Wei is based in London and led the EMEA side of Barclays’ leveraged finance.  She made her reputation by building a relationship with Mossin and Zuber Issa of EG Group over the years.  She’s been involved in every one of the $10bn of deals they have done since 2017.  This business is likely to be considerable more sticky and higher-margin than the kind of private equity fund-driven transactions that have characterized the US market, which was Tom Blouin’s franchise.

So this promotion would have made sense as part of a smaller-but-better strategy, reducing the overall size and capital demand while improving the return on capital. You could sort of call it “Blackburn, not Blackstone”. (The Issa brothers are based in the Lancashire town).

Except, that’s not what’s going to happen.  Travis Barnes, global co-head of capital markets, has said that “We have been a top five player in leverage finance for the past decade and we want to be part of that group again in 2024”.  And Barclays doesn’t plan to achieve this simply by shrinking less than the competition; according to Barnes, “We are seeing a pickup again around financial sponsors and leveraged buyout activity … that will be a key driver for our business”.

So, what’s gone on? Hard to guess, but the press release also credits Na Wei with playing “a key role in increasing Barclays’ market share with the firm’s top 20 financial sponsors clients”.  So one possibility is that the last twelve months have been a sort of informal probation period or extended selection process for a rising star.  Having moved JF Astier to lead the financial sponsors’ group, Barclays might reasonable have thought that the leveraged finance business had some big shoes to fill, and consequently appointed co-heads to reduce the transition risk and keep their options open. 

And now Na Wei is in sole charge, at a time when Barclays curiously wants to both grow its leveraged finance business and withdraw from capital intensive activities.  The question of whether Barclays’ risk appetite is really growing or shrinking will no doubt be clarified at the investor update on strategy on the 20th of February.  But for the time being, Wei's new rule doesn't look very easy. We wish her the best of luck.

Elsewhere, you wouldn’t necessarily think of French equity derivatives quants as soulful types, but according to Yann Garnier they are, or at least at SocGen, where he’s head of global markets sales and research.  In an interview on the occasion of SG winning “Equity Derivatives House of the Year”, he says that between 2015 and 2020, “We lost our soul between 2015 and 2020 and we became a broker of structured products, pricing super competitive payoffs … and focusing on market share [instead of focusing on] who are the strategic clients for the franchise”.

In context, it seems that we’re not talking about poetic inclination, emotional vulnerability or anything – the “soul” of an equity derivatives business is more a matter of designing cleverer and cleverer new products.  According to its management, SocGen lost sight of this for a while, going for volume and revenue rather than concentrating on the kind of client who really appreciates a good double-knock-out-reset-Bermudan-lookback collar or whatever.  So it seems that like Kalil Gibran told us, the key to the soul is self-knowledge

Meanwhile …

The latest indignity for those who pursue the massive fee pool that is Saudi Arabia; it’s one thing to not be able to tell your family and friends what you do, but McKinsey and BCG are apparently not even allowed to explain to a Senate subcommittee what they’re consulting on.  The consultants would be at risk of prison if they said anything without the kingdom’s permission. (FT)

An absolute nightmare scenario for some poor middle office worker in Hong Kong – a slightly strange request from the CFO back in London, but confirmed with a video call including employees they recognised … and that’s how $25m got sent to deepfake fraudsters. (CNN)

Women trying to balance the demands of family and a high-profile career in banking don’t have time for alcohol, so they’re taking microdoses of magic mushrooms instead.  Apparently it’s “like a happy Advil”. (WSJ)

After helping BlackRock build an infrastructure finance business, industry pioneer Anne Valentine Andrews is off to Manulife to do the same thing there. (Business Insider)

If you work for Morgan Stanley and feel like exploring a run for the US Congress, don’t assume that permission will automatically be given.  Deborah J Adeimy, a wealth manager who was turned down for temporary leave in 2022 thinks (after losing by 130 votes in the Republican primary) that this is unfair and has been awarded $147k (rather than the $11m she asked for) in an adjudication case. (Advisor Hub)

A protestor explains why they took their toddler to a sit in outside Citi CEO Jane Fraser’s house, and what happened.  The kid came home singing “wake up Jane” and “fossil fuels gotta go”. (Common Dreams)

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AUTHORDaniel Davies Global Editor

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