Barclays PLC group CEO Jes Staley's decision to boost the bank's investment banking arm in the face of shareholder pressure has paid off after it won top spot for European banks in U.S. rankings.
Staley has come under intense pressure over the investment banking business in the past 18 months, in particular after U.S.-based activist investor Edward Bramson took a stake of around 5% in the bank to lobby for it to scale back its investment banking operations to focus on its core U.K. banking activities.
Yet the British lender was fifth in Dealogic's rankings of investment banks in the U.S. by revenue for the full year 2019, leapfrogging Citigroup Inc. to move up from sixth.
Its nearest European rival was Credit Suisse Group AG, which remained seventh with a market share of 4.3% compared with Barclays' 5.7%.
In global rankings Barclays was also up, to sixth place from seventh previously, which was its highest ranking ever, ahead of the only other European banks in the top 10 list, Credit Suisse and Deutsche Bank AG.
The bank retained second place in the U.K., behind Goldman Sachs Group Inc., but fell down the rankings in Europe, the Middle East and Africa, to seventh place from fifth previously.
Barclays' U.S. operations are based on its acquisition of Lehman Brothers' U.S. operations at the start of the financial crisis in 2008.
Bramson has argued that Barclays' investment banking operations, in common with other European banks, lacked the scale necessary to take on the much bigger U.S. investment banks, led by JPMorgan Chase & Co. and Goldman Sachs. Bramson last year tried to win a seat on the board, though he failed to gain sufficient support from shareholders.
Nevertheless, following his emergence on the shareholder register, Staley took action to boost the investment bank's performance. He took direct control of the business himself, after ousting Tim Throsby, who had only been in charge for 18 months, to boost profitability.
Barclays' investment bank reported a 77% year-over-year rise in profits to £882 million in the third quarter of 2019, with a sharp rise in fixed income, which was up 15% to £2.64 billion.
"To be a bulge-bracket investment bank in the two deepest capital markets in Europe and the U.S. you have to be in all capital markets, including equities. We are going to stay fully invested in that business," Staley told analysts when third-quarter results were announced.
The corporate and investment bank accounted for nearly 60% of group risk-weighted assets when third-quarter results were unveiled but the bank said this was unlikely to increase.
Barclays' nearest European rival in the global rankings, Credit Suisse, has said its investment banking and capital markets arm is set to make a loss for full year 2019, in part because of a decline in M&A. Its investment banking arm has had a turbulent time as the bank focuses more attention on wealth management with the aim of reducing its reliance on volatile trading. The investment bank's CEO, James Amine, stepped down after 10 years and moved to head the private credit opportunities team. His replacement David Miller has said he intends to accelerate decision making and streamline processes at the unit.
Deutsche Bank, which remained in eighth place in the global rankings, has had an even more tumultuous time with its shares plunging to record lows in 2019 after a series of profit warnings and regulatory probes along with a global slowdown. It abandoned a merger attempt with fellow German bank Commerzbank AG and its CEO Christian Sewing is in the midst of the bank's most radical overhaul in decades. It will ax 18,000 jobs and close its equities trading operation while creating a "bad bank" to hold unwanted assets.
Sewing in July described the bank's investment banking operations as where "we lost our compass in the last two decades" but has now said that the investment bank will again become Deutsche's fastest-growing business, growing by an average of 2% per year and generating a return on tangible equity of up to 8% by 2022.
Nevertheless, Deutsche Bank has a long way to go — in Dealogic's rankings for its home market, Germany, the bank ranked fourth, down from the No. 2 spot previously, behind three U.S. banks.