Top Biz News

Barclays Capital seeks expansion in China

By Hu Yuanyuan (China Daily)
Updated: 2006-07-22 09:41

Barclays Capital, the investment-banking arm of Britain's No 3 bank Barclays Plc, is seeking another 30 per cent business growth this year as it focuses on risk management and financing.

After establishing its Shanghai branch last November, Barclays' business expanded at a growth rate of 30 per cent last year, exceeding its 20 per cent target and 1 per cent higher than that for Asia.

But as rivals such as HSBC, the Royal Bank of Scotland and Bank of America are buying stakes in Chinese banks to expand their businesses, Barclays mainly relies on its organic growth.

"But we will also not miss any merger and acquisition opportunities when there is the right chance," Justin Bull, managing director of Barclays Capital, told China Daily on Friday.

Barclays in September 2004 won approval to invest as much as US$75 million under the qualified foreign institutional investor programme. And the company has applied to China's foreign exchange regulator to raise the limit for investment in yuan-denominated shares and bonds, Bull said.

"We hope to get the new quota at the end of August," he added, but declined to give a figure. Meanwhile, the Shanghai branch is waiting for a licence to offer derivative products. "We are likely to get the licence within the year," Bull said, adding the company is also applying for approval to trade yuan products within three years.

The British bank is expanding in China and elsewhere in Asia as Chief Executive John Varley tries to make good on a pledge to more than double the share of earnings outside the United Kingdom, where consumer banking is slowing, from about 25 per cent last year.

Barclays has 15 offices across the Asia-Pacific region. It opened two branches as well as two offices in Asia last year.

"In the following three to five years, our branch expansion in China will not be slower than that speed," said Bull.

He added the bank's major challenge in China is to stay focused on its goals and client needs.

"Given the huge size and rapid growth of the Chinese market, we want our business to match the growth with our capital and talents," he said.

Risk management and financing services are considered Barclays' strength. And these two areas also provide growth prospects in the China market.

This strategy is in line with Barclays Capital's focus in other markets as well. The company has consistently ranked the top debt-focused investment bank in Europe, and one of the top three globally.

The major clients for Barclays Capital in China are financial institutions and enterprises that are expanding overseas for future growth.

"We have been in partnership with several banks and enterprises," said Bull. "Such co-operation will allow us to better understand customers' demands and the China market."

And the company has a larger role to play as Chinese enterprises and financial institutions see an increasing need for financial instruments to hedge their exposure as they face more foreign exchange rate risks.

China has committed to developing its foreign exchange derivatives markets in order to provide companies with more advanced hedging tools, but is yet to publish details of its plans.