Barclays Group has updated its development strategy for the first time in nearly a decade.
This top UK bank will restructure its business into five operational departments, enhance departmental performance disclosure, and enhance accountability from an operational and management perspective. And will return £ 10 billion to shareholders between 2024 and 2026, with the goal of achieving a tangible return on equity of over 10% by 2024 and an increase to over 12% by 2026.
How much impact will the above business adjustments have on Barclays Bank China? How is the business development in China? In response to the above issues, Interface News interviewed Liu Yang, CEO of Barclays Bank in China.
Liu Yang joined Barclays in 2021 and is currently responsible for Barclays China's business, including investment banking, commercial banking, and financial markets, as well as financial market sales in Asia excluding Japan.
In the interview, Liu Yang also talked about the licensing issue of Barclays China and the "tactics" for 2024.
Interface News: What impact will this business adjustment have on the China region?
Liu Yang: The adjusted global business line has been divided into five departments, namely UK Retail Banking, UK Corporate Banking, Private Banking and Wealth Management, US Credit Card Business, and Investment Banking. The investment banking business includes corporate banking outside the UK, global financial markets, and investment banking. In fact, the product line in Asia has always been in this model, and the UK and the US have been most affected by business line adjustments, with little impact on the layout or structure of Asian business.
Interface News: What is Barclays' positioning for development in China?
Liu Yang: The return on equity and tangible return on equity of Barclays Greater China in 2023 are much higher than the average of the entire group. The overall transaction revenue of Chinese products has shown significant growth.
Investment decisions must be localized. For foreign financial institutions, whether it is for regulatory or economic environments, the specific localization of the market and the subtle differences in the local market are very important. It's difficult for our headquarters in other countries to suddenly have insight, decision-making power, or complete knowledge of what's really happening in the market.
"Bridge" has always been the positioning of Barclays China. Perhaps in the next five years, our development scale and overall competitiveness in China may not be comparable to state-owned banks or top foreign-funded banks, but we firmly adhere to a long-term approach.
Interface News: However, based on Barclays' business layout in China, the company has not made actual progress in licensing yet. Are there any considerations for licensing in the future?
Liu Yang: Within the framework of Barclays China's business planning, we have continuously received regulatory support for the official launch of new products in the past two years, and we will continue to complete the launch of new products in 2024. This year, we will first expand and strengthen the most basic platform within the scope of our existing license business.
Interface News: Faced with the current phenomenon of IPO cooling in the financial market and the increasing popularity of big asset management and big wealth management, what new "tactics" does Barclays have?
Liu Yang: This year's adjusted organizational structure has a new private banking and wealth management department, mainly located in the UK, and mainly in India and Singapore in Asia.
In 2023, the savings of households in China have increased significantly, which is a process of rebalancing. Because many funds were originally invested in real estate, ordinary investors may now prefer to take measures such as saving or preserving and increasing value, so we will definitely conduct systematic research in this area. But now in China's wealth management market, we are still in the process of learning.
In terms of investment banking, currently it appears that investment banking is the most countercyclical field. Many financial institutions have been hit hard by investment banking, but Barclays' revenue is relatively stable because we have risk tolerance to support our business, balancing many unexpected commission income.
Therefore, in the next one or two years, we hope to use risk tolerance support as an anchor to more closely integrate Barclays' risk tolerance and investment banking business. This is also a trend in the global capital market, combining capital market activities with different banking and lending activities.
Interface news: The 10-year US treasury bond is known as the "anchor of global asset pricing". In 2023, the interest rate of the 10-year US treasury bond will exceed 5% for the first time in 16 years. Many domestic investors have shown great enthusiasm for investing in overseas financial markets. How do you view this?
Liu Yang: Many US dollar assets and other assets overseas are indeed very attractive and competitive.
The most fundamental aspect of the financial market is the 10-year interest rate in the United States, which has high volatility in 2023. Despite the decline in 10-year US Treasury yields in 2024, investing in overseas assets remains highly attractive to domestic investors in the relatively stable domestic macroeconomic environment of the renminbi.
Influenced by the high yield of the US treasury bond bonds in 2023, the bond products in 2023 do not need to have many fancy combinations. As long as they are simple, transparent and stable, they are already very popular in the market. This is also the most basic card Barclays will play in 2023.
However, there may be changes in the bond market in 2024. Considering the impact of the macro environment, if the Federal Reserve starts to cut interest rates, the overall bond interest rate market environment will fluctuate. Therefore, bond products will definitely become more diversified and complex this year.