Barclays Investment Bank: extending the cuts Barclays remains focused on underlying profitability. Historically, however, the bank's main challenge was revenue generation, rather than cost control. Our analysis highlights APAC equities, global credit, EMEA securitisation and US commodities as key areas of weak profitability.

1. Banks
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1 / 3 DK / SW / 15 December 2015
Barclays Investment Bank: extending the cuts
Barclays remains focused on underlying profitability. Historically, however, the bank's main
challenge was revenue generation, rather than cost control.
Our analysis highlights APAC equities, global credit, EMEA securitisation and US commodities as
key areas of weak profitability.
Last week, rumours emerged that Barclays, in an apparent extension to its 'Strategy Refresh'
programme, may cut an additional 20% of Investment Bank's staff. This would come on top of 7,000
cuts - announced by the previous CEO and due by the end of 2016 - and 2,700 positions that were
closed between May and September 2014. News that Barclays may delay the payment of 2015
bonuses to Associates and more senior staff from mid-February to late March 2016 adds credence to
the rumour.
Since taking over Lehman Brothers' operations, Barclays managed its cost base carefully. Even the
2014 drop in adjusted cost/income may prove a mere blip: by 9m15, the bank was almost back to
end-2009 level. Revenue generation, however, remains a challenge: in contrast to many of its peers,
Barclays suffered years of decline in its operating revenue.
BARC vs Top 8 (indexed to FY09, US$)
Cost/Income (reverse scale) Operating revenue (pre-writedown, US$)
Source: Tricumen. Notes: (1) Top 8 comprise capital markets/investment banking units of Bank of America Merrill Lynch, Citi,
Credit Suisse, Deutsche Bank, Goldman Sachs, J.P.Morgan, Morgan Stanley, UBS. (2) FICC: FX, rates, credit, commodities, and
securitisation. Equities: cash, derivatives, converts, and prime services. Principal investments, dedicated prop trading units and
CVA/DVA/equivalent items are excluded. (3) Cost/income includes restructuring and litigation costs, allocated to front-line units.
In the table below, we compare Investment Bank's 6m14-6m15 average cost/income ratios in main
regions and product areas1
with that of its eight peers. Barclays scores well in Banking/primary areas
(especially in M&A/Advisory); but lags in APAC equities, credit, and EMEA securitisation.
The APAC division - and its cash equities unit in particular, which we believe was not profitable for
years - were highlighted by the media as being the main targets of the latest headcount reduction
initiative; some market commentators reported that even middle-office staff in the region may not be
spared. Other parts of Barclays’ regional equities business were hampered by its traditional focus on
Singapore - as opposed to Hong Kong - meaning it missed out on opportunities as APAC equity
derivatives markets grew.
Credit is another challenging area. Once a key strength for the bank, the division has suffered from
falling balance sheet allocation (which roughly halved from the end of 2011 to 1H15) and the
challenge of retaining a full client service offering in the face of decline in margins. Most recently,
falling European corporate bond trading volumes have challenged the bank's traditional area of
strength.
1
Our full analysis comprises 7 regions, flow/structured product and client type splits.
90
100
110
120
130
140
150
FY09 FY10 FY11 FY12 FY13 FY14 9m15
BARC Top 8
0
20
40
60
80
100
120
FY09 FY10 FY11 FY12 FY13 FY14 FY15
(ann.)
BARC Top 8

2. Banks
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2 / 3 DK / SW / 15 December 2015
Other areas have been hit by cyclical challenges. The European CMBS market has yet to truly emerge
from the shadows making European securitisation a challenging business for the bank. Further, in
commodities, the US the bank’s withdrawal from the energy market has left a rump focused on
facilitating client needs; this is in contrast to other regions, where Barclays retains pockets of true
expertise.
Cost/income: BARC over/under Top 8 (average for 6m14, FY14 and 6m15, US$)
Source: Tricumen. Note: Dark green areas represent BARC's top quartile outperformance vs Top 8 average; Light green: 2nd
quartile; Light orange: 3rd quartile; Red: bottom quartile, where BARC's cost/income is significantly below Top 8 peers.
Banking FICC Equities
EMEA EMEA EMEA
AMER AMER AMER
APAC APAC APAC
DCM Bonds FX EQ Cash
EMEA EMEA EMEA
AMER AMER AMER
APAC APAC APAC
DCM Loans Rates & Munis EQ Derv & Converts
EMEA EMEA EMEA
AMER AMER AMER
APAC APAC APAC
ECM Credit Prime Services
EMEA EMEA EMEA
AMER AMER AMER
APAC APAC APAC
M&A / Advisory Commodities
EMEA EMEA
AMER AMER
APAC APAC
Securitisation
EMEA
AMER
APAC
BARC
over/under
Top 8
BARC
over/under
Top 8
BARC
over/under
Top 8

3. Banks
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3 / 3 DK / SW / 15 December 2015
About Tricumen
Tricumen was founded in 2008. It quickly became a strong provider of diversified market intelligence
across the capital markets and has since expanded into transaction and corporate banking coverage.
Tricumen’s data has been used by many of the world’s leading investment banks as well as strategy
consulting firms, investment managers and ‘blue chip’ corporations.
Situated near Cambridge in the UK, Tricumen is almost exclusively staffed with senior individuals with
an extensive track record of either working for or analysing banks; and boasts what we believe is the
largest capital markets-focused research network of its peer group.
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