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Investment banks’ trading revenue more likely to shrink, Barclays boss says

Investment banks revenue shake-up looms in 2023, Barclays boss says Reuters. FILE PHOTO: The logo of Barclays bank sometimes appears on glass lamps beyond a branch of the lender in the town of London financial district in London September 4, 2017. REUTERS/Toby Melville

By Sinead Cruise and Iain Withers

LONDON (Reuters) -Investment banks will probably visit a shake-up in revenues next year, with a rebound in banking and advisory fees likely to soften popular from the fall in trading income, Barclays (LON:)’ CEO C.S. Venkatakrishnan told an investor event on Tuesday.

A trading surge has helped investment banks report robust results this season and helped to offset a dire year for fees on company flotations and M&A deals amid global market turbulence.

That may be set to improve by the next 1 / 2 of next year, Barclays’ CEO said.

“Trading revenue pools will most likely shrink a little and investment banking revenue pools will most likely rise. If they offset one another I have no idea,” Venkatakrishnan – known internally at Barclays as Venkat – said at a Bank of America (NYSE:) event.

“But I anticipate volatility in the markets continuing at the very least in the initial and second quarter of next year. So the declining trading revenue pools seasonally adjusted is more prone to happen in the next 1 / 2 of next year.”

Venkat said a flurry of interest rises in Britain – Barclays’ market – with another rise expected from the lender of England this week, would eventually cool the economy.

But he said he still expected rate rises to be “a net positive” for Barclays since it boosts income from lending. He said he expected all of the bank’s three main sections to exceed 10% return on tangible equity – an integral way of measuring profitability for banks – next year.

The British government’s intend to cap energy prices to assist people facing squeezed household budgets would help the economy, but Barclays is more cautious on the country’s outlook than it really is on america, Venkat said.

“I believe the U.S. economy is showing less signs of weakness,” he added.

Venkat also provided an update on one that led to the lender overselling a variety of complex financial instruments in breach of U.S. rules.

The lender will give additional information on the ultimate costs of its so-called rescission offer to get back the securities in “relatively short order”, Venkat said.

Barclays said the other day that investors had submitted claims for $7 billion out of $17.7 billion worth of securities it sold in error, beneath the terms of the rescission offer where the lender had to get back the notes and compensate buyers.

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