Barclays Capital is preparing for the sale of more than €1bn worth of German apartments, reports the FT, citing people familiar with the process as saying the bank has held discussions about the sale of the portfolio with private equity buyers, including Blackstone. The sale, involving 26,000 residential properties, predominantly in Berlin, Hanover and Magdeburg, would mark one of Europe’s largest residential property deals since the start of the financial crisis. BarCap took control of the residential portfolio last month after exercising a call option on a €1.36bn loan made to BauBeCon, the German residential landlord, at the peak of the market in 2007. The BauBeCon portfolio had a market value of €1.42bn at the end of June, with the yield on the portfolio at 6.8 per cent and a 4.2 per cent vacancy at the end of 2010, according to a report by CoStar Finance earlier this year. It is unclear how much BarCap has written down the value of the portfolio, but bids of between €900m and €1.2bn are understood to have been made.
Another big equity selloff today, with financials leading the pack down; in other words, the perfect setting for I-banks to start carpetbombing each other with forecast markdowns.
We kid. But almost on cue, it seems, comes Barcap with a note on financials that includes an estimated Q3 loss for Goldman, which would be only the second quarterly loss in the bank’s history (since it went public). Read more
Barclays star banker Todd Edgar and his team of nearly a dozen fellow commodities traders are set to leave the bank amid a push to cut costs, reports the FT. The move is part of a strategy to shed overheads and put the UK bank on target to hit profit targets but comes only two years after Edgar was poached from JPMorgan’s proprietary trading team to join Barclays Capital. The £30m deal stoked a political storm at the time, sparking a semi-public row which ended in the US bank filing a complaint with the UK’s Financial Services Authority.
Star banker Todd Edgar and his team of nearly a dozen fellow commodities traders are to leave Barclays as part of a stream of cuts designed to shed overheads and put the UK bank on target to hit profit targets, the FT reports. Mr Edgar – previously one of JPMorgan’s top proprietary traders – stoked the political storm over bankers’ pay in 2009 when it emerged that he and four members of his proprietary trading team had been poached by Barclays Capital on a two-year deal worth as much as £30m. He and his colleagues now plan to set up a hedge fund by the end of the year. People close to the situation said it had become untenable for BarCap to employ prop traders in the light of US Dodd-Frank leglislation barring banks from trading on their own account.
Barclays is planning to boost revenues by up to 20 per cent by 2013 from last year’s levels in an ambitious attempt to improve returns at the bank, writes the FT. Bob Diamond, chief executive of Barclays, outlined on Wednesday a plan to boost revenues by up to £6.4bn ($10.3bn) by 2013 despite problems in its troubled European division and its corporate bank.
Goldman Sachs, along with JPMorgan, advised Skype in its $8.5bn sale to Microsoft – the biggest tech deal of the year, reports DealJournal. The transaction – unveiled on Tuesday – catapulted Goldman to the top of the financial advisers ranking on global tech deals, even as the bank has been pushed off the overall top spot for global M&A rankings by JPMorgan. So far this year, Goldman has advised on more than $34bn worth of deals, gaining about 36% of market share in the sector, according to Dealogic. Morgan Stanley is just behind with $26.5bn of deals and 28% market share. Morgan Stanley, one of Skype’s three chosen underwriters for its (now scrapped) IPO, was not involved in the Microsoft deal. BofA Merrill Lynch, Credit Suisse and BarCap round out the top five in the tech deal rankings.The FT meanwhile reports that Goldman on Tuesday said its traders lost money on only one day in the last quarter.
Glencore’s risk appetite in commodities trading exceeds that of top Wall Street banks, according to the banks underwriting the Swiss trading house’s multibillion-dollar flotation, reports the FT. The banks’ reports ahead of Glencore’s IPO highlight the financial activities of the world’s largest commodities trader. Glencore’s risk appetite will be a key factor for investors in this month’s offering in London and Hong Kong. The research reveals Glencore could have lost a daily $42.5m last year on average when measured by the so-called “value-at-risk” measure, far beyond the average $25.7m put at risk each day in 2010 in commodities trading by Goldman Sachs, Morgan Stanley, Barclays Capital and JPMorgan – the four largest commodities dealers in the financial sector. The WSJ meanwhile reports that Asian and Middle Eastern sovereign wealth funds are in advanced talks for shares in Glencore’s listing.
Plenty of column inches on Thursday are devoted to the wind up of Protium, the Cayman Islands-based vehicle created by Barclays to warehouse a portfolio of highly toxic credit market assets.
According to the FT, analysts see the Protium — also a name for a medical treatment for gastric acid – as another example of Barclays’ unnecessary complexity that has fuelled distrust among shareholders, holding back the bank’s share price and rating the stock at barely 80 per cent of the group’s asset value, a discount to many peers Read more
Barclays has kicked off the first quarter reporting season for the UK banking sector on Wednesday.
But its trading update hasn’t gone down too well in the City of London. Read more
What is wrong with this picture?:
Business as usual?! Read more
PPL, the US utility, has agreed to buy the UK electricity networks business of Eon, Germany’s largest utility, for more than $5.6bn in cash and $800m of existing public debt to be assumed through consolidation, reports the FT. Under the deal, to close in April, the Pennsylvania-based company acquires the UK’s second-biggest electricity network. PPL edged out CKI, the investment vehicle of Hong Kong billionaire Li Ka-shing, which was also bidding for the assets. It is PPL’s second large purchase from Eon, after it beat Duke Energy and others last April to buy Eon’s US supply companies for more than $6.7bn in cash. Eon is being advised by JPMorgan and BarCap, and PPL by Credit Suisse and BofA, adds DealBook.
Barclays has been fined £1.1m for failing to separate client money from its investment banking arm’s corporate account for more than eight years, marking the fourth hefty penalty in less than 18 months for the UK bank, reports the FT. The Financial Services Authority said Barclays Capital mingled up to £752m in client money with the bank’s corporate account on an intraday basis. Although the firm segregated the client money at night, the daily mixing violated rules intended to protect clients from loss in case of insolvency. The case is part of a larger effort to force banks to segregate client money properly. JPMorgan paid £33m last year, the largest fine in FSA history, for failing to segregate up to $23bn in client money.
Barclays Capital, the securities arm of UK bank Barclays, has cut about 200 jobs in its UK operations following an internal review, reports Bloomberg. The cut is part of a plan to eliminate what DealJournal reports is a total 600 jobs, or 2.4% of BarCaps global workforce. The decision follows a review started last year, adds Bloomberg. UK financial services companies will shed an estimated 45,000 jobs in the six months from September to March as they seek to lower costs, the Confederation of British Industry said this month. BarCap added about 2,000 people in Europe and Asia last year in an expansion of its mergers advisory and equities division, taking its global headcount to about 25,000.
A couple of months from now the Independent Committee on Banking will reveal the range of options it is considering to promote “financial stability and competition” in the UK banking sector.
But will the ICB opt for a break-up or a shake-up? That’s the question Rohith Chandra-Rajan, banks analyst at BarCap, has been debating. And his answer? Shake-up. Read more
Like a tapas bar owner in central Pamploma, FT Alphaville is well-attuned to bullish sounds.
2011 outlooks are accumulating in the Long Room, where you can sniff a strong whiff of qualified optimism for the year ahead. Even the hitherto pessimistic Goldman Sachs flared its nostrils a little this week. Read more
Barclays Capital is reversing its rapid expansion in the UK with plans to cut hundreds of UK jobs after a sharp slowdown in revenues, reports the FT. The job cuts, which will affect front-office bankers and traders as well as support staff, follow the departure of about 300 staff in August after a disappointing second quarter. A dearth of M&A activity and low volumes of sales and trading activity amid volatile markets have hurt global investment banks in the second half of the year, with most analysts’ projecting lower fee pools on 2009. BarCap, led by Bob Diamond, has been trying to win market share from weakened rivals. The bank, which acquired the US operations of Lehman Brothers in September 2008, now boasts a total headcount of around 25,000.
Warning: this Bloomberg hagiography of Diamond Bob is only for those with a cast-iron constitution. Here’s a taster:
As 1,100 managing directors from Barclays Capital descended on the Grosvenor House hotel near London’s Hyde Park in late September, they had more to celebrate than having successfully swallowed the North American unit of Lehman Brothers Holdings Inc. two years earlier. Their guy, Bob Diamond, the Massachusetts-born founder of Barclays Capital, had just been handed the top job at parent Barclays Plc in a sign of how he had transformed the 320-year-old British institution in his 14 years as investment bank chief, Bloomberg Markets magazine reports in its January issue. Read more
Talk about courtroom drama.
From the closing arguments of Lehman’s suit against Barclays (that’s the one alleging an $11bn ‘windfall’ asset grab when Barclays snapped up its best bits in 2008): Read more
JPMorgan has reopened an underground gold vault in New York that was shuttered in the 1990s, in the latest sign of investor appetite for bullion, reports the FT. The rise in gold prices – to a nominal high of more than $1,320 a troy ounce on Friday – has made the vaulting business more lucrative for banks that charge a small percentage of the value of gold stored. Many dismantled their vaults in the 1980s and 1990s but are now rushing to build: JPMorgan recently built a vault in Singapore, while Deutsche Bank and Barclays Capital are considering new vaults in London. Bloomberg meanwhile quotes analysts saying gold prices may soften after recent record highs.
Mexico is taking out an insurance policy against oil prices falling next year, hedging its oil exports for 2011 at about $65-$70 a barrel, reports the FT. The world’s sixth largest oil producer hedged all its net exports at $57 a barrel this year, fearing a possible ‘double-dip’ recession. But, for next year, bankers and brokers said Mexico was locking in a sale price at a higher oil price. The move is the world’s largest hedge in commodities markets and one of only a few to be implemented by a sovereign entity, rather than a company. Goldman Sachs, Barclays Capital, Deutsche Bank and JPMorgan are organising the programme.
Ireland signalled its determination to return to the debt markets after Brian Lenihan, the finance minister, dismissed suggestions that the country might have to seek the IMF’s help, reports the FT. Lenihan on the weekend reiterated that Ireland had raised sufficient funds to finance its budget through to mid-2011. Irish bonds were hit by a sell-off last week after Barclays Capital suggested Ireland might have to seek IMF help if it suffered further bank losses and economic decline. Lenihan spoke ahead of a Tuesday bond auction, when Dublin hopes to raise €1.5bn ($2bn) with a four-year and eight-year bond. The WSJ adds that the IMF said on Friday it sees no need assist Ireland.
Mark Hurd could make nearly $11m a year in his new position of co-president at Oracle, putting him in the tech industry’s top pay ranks after his forced resignation as head of Hewlett-Packard last month, reports the FT. News of the pay deal followed a legal challenge from HP that some legal analysts saw as an attempt to recover some of the millions that the computer maker paid out to its former chief. HP’s board has been criticised over its agreement to pay Hurd a severance package valued at $35m-$40m. FT Alphaville meanwhile notes similarities between Hurd and newly-promoted bankers Barclays’ Bob Diamond and HSBC’s Stephen Green.
It’s getting ugly in executive-recruitment land. “HP sues to block Hurd’s move to Oracle”, reads one FT headline on Wednesday, while another proclaims: “Outrage over Diamond promotion“, while the BBC’s Robert Peston asks, “Has the casino swallowed Barclays?”
That’s just a tiny taste of the furore that the elevation of the two — er, rather controversial — chief executives has whipped up on both sides of the Atlantic. Read more
Barclays will on Tuesday confirm Bob Diamond, head of its fast- growing investment bank, as its next chief executive, reports the FT. Diamond, a former teacher and Morgan Stanley bond trader who built Barclays Capital into a multi-billion pound business, will take over from John Varley at Barclays’ annual meeting next March. Varley has indicated he wants to focus on charitable work and non-executive directorships, although some predict a role in the UK government. The succession plan has been widely forecast although the WSJ notes that the choice of an American, with no retail banking experience, to run a “proud British institution like Barclays is likely to raise eyebrows in the City of London”.
Big US banks should be able to meet tighter capital requirements without raising substantial amounts of equity, according to new calculations, reports the FT. Barclays Capital analysts estimate the 35 largest US banks will have to come up with only half as much new capital following last month’s rewrite of proposed requirements by the Basel Committee on Banking Supervision. Nomura analysts recenty said that the top 16 European banks would also gain a sizeable benefit. The findings could revive complaints that the reforms have been softened too much for the banks. DealBook meanwhile cites Basel committee studies about the macro-economic impact of the reforms.
Barclays Capital, the investment banking arm of Barclays, plans to cut up to several hundred jobs after a sharp fall in Q2 market activity, reports the FT. The job losses, which could be announced as early as Wednesday, will fall across back office and administrative functions that support BarCap businesses, such as sales and trading. The cuts could raise questions about BarCap’s aggressive expansion in recent years under the leadership of Bob Diamond. Even so, BarCap will end 2010 with more staff than a year earlier.
Barclays on Thursday reported a 44% increase in first-half profit, although its results were clouded by Q2 revenue and profit declines at Barclays Capital, its investment banking arm, reports the FT. The banking group said first-half pre-tax profit was £3.95bn, up from £2.75bn a year earlier and better than analyst expectations. The increase was fuelled by an annual drop of about a third in loan loss charges. However, notes Lex, “bread-and-butter banking” at Barclays is “not yet robust enough to compensate for slowing flows at the casino”.
As American equity markets awaited the onset of the earnings season (Alcoa kicks off, after the bell on Monday), consider this factoid from Matthew Rothman, Barcap’s top quant research man in New York:
Recommending stocks in the current environment may well be a fool’s errand…stock selection has rarely ever been more difficult than it has over the past 2 months. Stock return dispersion is a historically low levels with macro economic factors being chiefly responsible for the direction of stocks. Read more
Clive Cowdery is back in the limelight, as the insurance entrepreneur’s Resolution Group confirmed talks to buy part of Axa’s UK business for about £2.8bn.
Resolution shares have been suspended from trading on the London Stock Exchange on Monday ahead of a more detailed announcement, following the group’s statement, as follows (our emphasis): Read more
Barclays Capital, the investment banking unit of UK-based Barclays, plans to launch a pan-European “dark pool” trading platform as it completes an 18-month drive to build an equities trading business, reports the FT. BarCap has hired 750 traders, research analysts and sales staff in Europe since Lehman collapsed in late 2008, and now claims to be the seventh largest provider of orders on the London Stock Exchange.