Barclays says it still has Gulf critical mass

Barclays Plc still has “critical mass” to compete in the Middle East and will aim to help local companies raise capital even as it scales back lending, Chief Executive Officer Jes Staley said.

The U.K. lender has more than 200 employees in the United Arab Emirates after job cuts in the country this year and will continue to operate its corporate, investment banking and wealth management businesses in the region, Staley, 59, said in an interview in Dubai on Thursday. Barclays’s U.A.E. business is “very profitable,” Staley said, without elaborating on the profitability.

Staley is joining other banking chiefs in trying to prove that a global lender doesn’t need expansive operations in every country where it wants to earn fees. Barclays has exited seven countries in Asia as part of a restructuring, and Staley said the bank will use its presence in the U.A.E. to bring international investors and companies there and to nearby nations such as Qatar.

“If you then have a very strong presence in New York and London in terms of your ability to distribute securities to the major providers of capital, you are, in effect, a global bank,” Staley said. “I feel very comfortable that the footprint that we have now defined enables Barclays to be very competitive.”

Barclays was cutting about 150 jobs in Dubai as the U.K. lender restructures its Middle East corporate banking business, a person with knowledge of the matter said in February, joining rival lenders HSBC Holdings Plc and Standard Chartered Plc in reducing headcount in the region.

Staley said the Middle East was the first region he’s visited outside of New York and London, even as the bank’s headcount in the U.A.E. makes up a tiny portion of its 129,400 total. Part of the firm’s efforts in the region will be helping companies find alternative sources of capital, as bank lending becomes more expensive, he said.

“Commerce around the world has to adjust to the new reality that bank balance sheets are very expensive to use these days,” Staley said. “Regulators around the world want the largest banks to reduce the use of their balance sheets for funding economic growth and instead focus on the capital markets to match the borrowers with the lenders of capital.”

Still, Barclays has been associated with some key deals from the Gulf region, including advising on the acquisition by the Qatar Investment Authority and Brookfield Property Partners LP of London’s Canary Wharf Group Plc and Borse Dubai’s sale of its $2.1 billion stake in the London Stock Exchange Group Plc. It was also one of the banks that managed the initial public offering of Abu Dhabi’s Gulf Marine Services Plc on the LSE.

Barclays’s position as an arranger of bond sales in the six-nation Gulf Cooperation Council has slipped. It was the 20th-ranked arranger of bonds and sukuk sales in the GCC last year, a table led by HSBC, down from 14th in 2014, according to data compiled by Bloomberg.

The British bank has been under investigation by the U.K. Serious Fraud Office since 2012 over its 7 billion-pound ($10 billion) fundraising from the QIA in 2008, which allowed the lender to escape a taxpayer bailout. The SFO is looking into 322 million pounds in advisory fees Barclays paid the QIA, and the bank agreed earlier this year to hand over internal documents to the SFO.

Barclays is reducing its stake in its Africa unit and plans to sell its retail banking business in Egypt. The sale of the Egyptian unit is in the “early stages” and “there is a lot of interest” in the business, Staley said.

Barclays’s plan to withdraw from markets like Brazil, Russia and the Philippines won’t hamper its plan to be a global investment bank, Staley said.

“You don’t need to have these local trading capabilities” in such countries, he said. “And we will prove that.”’-Bloomberg