Barclays Expands Prime Brokerage Unit amid Archegos Collapse

The bank has already started to hire staff for the expansion.

The UK lender, Barclays is making a push to expand its prime brokerage services as many of its rivals stepped back from the space after the collapse of Archegos Capital, FN London reported on Thursday.

“We view prime services as a big opportunity and are investing heavily in the business,” Paul Leech, Co-Head of equities at Barclays, said. “We’re expecting to grow market share, and in order to provide the same level of client support, we need to continue to expand our resources to support that growth.”

Filling the Gap

Barclays is currently the fifth-largest prime broker in Europe with 15 percent of the market share, according to Preqin. Now, it has started to hire staff to expand its prime brokerage market share, leveraging the opportunity of minimized competition.

Archegos Capital, which is a family office, collapsed earlier this year, making an overall dent of $10 billion to the banks. Credit Suisse alone suffered a loss of $5.5 billion while Nomura’s $2.9 billion forced it to pull out from the prime brokerage business.

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“Clients tell us they do not want to be too concentrated with any one bank, and they also see the benefit of diversifying with a European bank,” Leech added.

However, Barclays is not the only lender to take advantage of the Archegos collapse as Morgan Stanley, Goldman Sachs and JPMorgan indicated their intention to maintain or grow their prime brokerage unit. 

BNP Paribas has already taken over Deutsche Bank’s shuttered prime services and is migrating clients from Credit Suisse, thus already expanding its presence in the prime brokerage space.

“The impact of Archegos has been a concentration of the prime broking business in the top three banks, which have balance sheet and risk appetite,” Youssef Intabli, Coalition Greenwich’s Head of Equities, told the publication. “But, I think there will be a redistribution of those balances over the next six to twelve months to avoid too much exposure to the major banks and this is an opportunity for European banks and smaller US players.”

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