Barclays Capital

Barclays Capital, also known as Barcap, is the investment banking arm of Barclays bank, one of the biggest British banks with a strong history of innovation. It is a leading global investment bank in its own right.

Barclays Capital offers most of the same services offered by any other investment bank. This includes trading commodities, fixed income products and equities. It also offers leveraged finance, structured products and private equity. It is a particularly large player in electronic trading and offers this as an expertise to its clients. It also offers advice in finance raising, with a strong presence in the municipal bonds issuance. As anyone would expect with any large investment bank, equity and debt origination are also offered.

Barclays Capital was formed in the British regulatory “big bang” when a large number of restrictive practices were lifted and retail banks were allowed to offer stock broking and market making services. In 1986 it formed Barclays de Zoete Webb, which was shortened to BZW, by buying a stock broker and a market maker (which accounted for the de Zoete and the Webb at the end of the name). All the other big banks followed suit and did the same. Barclays was always a leader in integrating its brand name and offerings into the main retail bank and the division, becoming Barclays Capital 1997.

In 1995 Barclays spun off the Investment Management function to become Barclays Global Investors when Barclays bought the fund manager Wells Fargo Nikko Investment Advisers.

Barclays Capital has more than 20,000 employees in 29 countries. It has about $2.5 trillion of assets under management. Barclays Bank is one of the largest banks in the world. It was founded in London at the end of the seventeenth century and during a period of expansion in the Nineteenth and early Twentieth Centuries it expanded across Britain and then throughout the British Empire, and it still has one of the largest presences in the developing world.

Barclays Capital’s chief executive Bob Diamond is an American who used to be the vice chairman of Credit Suisse First Boston. He has been a strong voice in the arguments over investment bankers’ bonuses, claiming that if these are not set at very high levels then the banks that refuse to pay these bonuses will quickly be sidelined as they will fail to attract the top talent that is needed to keep these operations in business. The freedom to set bonuses at a high level is seen to be a primary reason why Barclays was so tenacious in trying to avoid a bail out from the British government, going instead to Middle Eastern investors with promises of very high returns.

Barclays Capital also featured in the 2008 financial crisis by buying out the American operation of Lehman Brothers. The bankruptcy of Lehman Brothers was seen to be the apex of the credit crunch that had been going on since 2007. Barclays had looked at buying out all the Lehman Brothers operations in 2008 but had pulled out at the last minute, prompting the bankruptcy of Lehman. In the fall out after the bankruptcy Barclays agreed to buy the North American operation of Lehman Brothers with the large Japanese investment bank Nomura Securities buying their operations in the rest of the world. This was seen as vastly expanding the reach of Barclays Capital within North America, a region where they had traditionally found it hard to grow. Lehman Brothers was always a big name on Wall Street (although for a large part of its history it had been part of larger financial groups) and with the investment Barclays Capital now had 20,000 employees.