August 2, 2015 4:18 pm
Barclays and Britain wave goodbye to the big time
Shrink and swim strategy leaves the City without a global investment bank, writes Philip Augar
What to do about investment banking is a question that has troubled Barclays ever since 1983, the year Timothy Bevan, a great-grandson of the first chairman, signed off on a proposal to buy and build an investment bank. It proved to be harder than it looked for Barclays and the other British groups trying to muscle in on Wall Street. The Americans had capital, experienced management and a hugely profitable home market. They powered into London, grabbed the biggest deals, hired many of the best bankers and squeezed margins. Globally aspiring UK investment banks were forced to give up.Barclays was the last one standing until it sold its equities and corporate finance business in 1998.
Last time it seemed superficially not to matter. London flourished as a global financial services capital. Employees, clients and regulators grew used to the idea that head office was in New York; and jubilant bankers derided the idea of national identity in the fast and fluid world of global finance.
The banking crisis gave cause for second thoughts about this Panglossian idea. By adopting US-style investment banking, the City had thrown away its cherished traditions of prudence and patience, and left the UK unhealthily exposed to a business it did not understand. What happened in the next decade was that the authorities stood back and lost control.
The presence of Barclays Capital in the middle of the global stage offered a brief period of knowledge and influence. Its absence will leave the UK more vulnerable.
The writer is a former banker who has written extensively about the City and is working at present on a book about Barclays