Barclays Turnover up 70% - no return on my savings why?

usignuolo

I see in the press that Barclays turnover is up 70% in the past year to around £10bn. I also understand that this increase is largely due to its investment banking arm. Investment banks advise on acquisitons and mergers and investments at a national level and international level.

This is where I get puzzled. Banks are certainly not lending to small companies, Governments are planning austerity cuts across the board, IPOs are being pulled left right and centre, the euro is down the tubes along with a lot of EU countries, no one can get any dividends on their shares or interest on their savings, the service sector is in the doldrums. The UK manufacturing sector is struggling, which must be replicated elsewhere and so is the high street which must impact the market for manufactured goods made in say China so the Chinese must be suffering too.

So what does Barclays Capital do that is generating such huge profits?

Lokolo

turnover != profit

usignuolo

Yes but what activity is generating that turnover?

noh

usignuolo wrote: »

Yes but what activity is generating that turnover?

http://www.barcap.com/About+Barclays+Capital/Our+Firm

usignuolo

I know what investment banks do in theory. But how can they be generating commission from IPOs or arranging mergers and acquisitions when these seem to be much reduced in number and indeed hardly any at all in the UK. Sovereign funds must have less to invest.. And with no dividend for shares or savings, who is churning their portfolio to increase their holdings? (Apart from that billionaire Saudi prince and even hehas been hit so I hear).

Does Barclays include a hedge fund operation? I see hedge funds have been taking out big positions against the Greek drachma in recent weeks. And hedge funds of course charge both a 2% management fee and a large percentage of any profit made to their clients. Maybe this is where some of the profit is coming from?

cantthinkofanickname

Isn't it possible to tell from the accounts?

RHB

usignuolo wrote: »

Does Barclays include a hedge fund operation? I see hedge funds have been taking out big positions against the Greek drachma in recent weeks. And hedge funds of course charge both a 2% management fee and a large percentage of any profit made to their clients. Maybe this is where some of the profit is coming from?

Drachma ceased to exist about Jan 2002. Positions against the euro, yes.

Debt_Free_Chick

usignuolo wrote: »

I know what investment banks do in theory. But how can they be generating commission from IPOs or arranging mergers and acquisitions when these seem to be much reduced in number and indeed hardly any at all in the UK. Sovereign funds must have less to invest.. And with no dividend for shares or savings, who is churning their portfolio to increase their holdings? (Apart from that billionaire Saudi prince and even hehas been hit so I hear).

Does Barclays include a hedge fund operation? I see hedge funds have been taking out big positions against the Greek drachma in recent weeks. And hedge funds of course charge both a 2% management fee and a large percentage of any profit made to their clients. Maybe this is where some of the profit is coming from?

Here's some of the deals done last year

Some of the t/o will be fees from advisory services not all will be from deals.

usignuolo

Recent articles in the financial press have made it a bit clearer. Around half the profit came from the sale of a money management subsidiary in the US and a further 40% of the profit was also achieved in the US. There are increased fees for debt rescheduling and of course a bigger percentage of revenue in the UK can be generated from higher interest rates charged on credit cards (about to increase it seems despite the bank rate being at a historic low). And I read in my paper today that Barclays Capital has an active commodity trading desk trading in oil, set to benefit from the current rise in oil prices. Presumably the bank trades in other commodities as well and on the foreign exchange markets.

Although Barclays has denied it is involved in any proprietary trading, it will like most banks, cover a client's position during a big deal. Most investment banks use this function to gloss over some hedging on their own account. I don't know if this is true in Barclays but presumably there is room for manoeuvre when covering a client's positions to make a turn.