Barclays's Japan Profit Revival Sets Stage for Expansion Phase

(Bloomberg) -- Barclays Plc has turned around its Japan business after three years of losses, giving it the confidence to boost investment banking and markets operations in the country.

The U.K. bank’s Japan unit posted record profit in the year ended March, thanks to rising fees and cost cuts. After hiring about 25 bankers, traders and sales staff so far this year, local chief Kentaro Kiso wants to recruit more people, including for corporate finance and mergers and acquisitions advisory businesses.

“We were able to prove our capability in the past two years,” allowing hiring in areas such as derivative trading, sales and equity finance, said Kiso, 51, who took over as president of Barclays Securities Japan Ltd. in 2016. The firm is seeking bankers in the healthcare, telecom and information technology sectors, he said in an interview in Tokyo, without specifying the number he may add.

Barclays Chief Executive Officer Jes Staley, who visited Tokyo earlier this month, is trying to build the company’s wholesale banking business after completing a period of restructuring. In Japan, following the withdrawal from the cash equities business at the start of 2016, Kiso has been hiring to revive revenue.

(Billions of yen) FY 2017FY 2016FY 2015
Revenue51.039.448.1
Fees 37.827.935.4
Expenses33.734.742.3
Net income10.5-8.7-8.6

The Japanese securities unit posted net income of 10.5 billion yen ($94 million) in the year ended March as fees from its business serving hedge funds increased, a regulatory filing showed last month. Expenses fell slightly.

Economy Flights

The unit has been trying to cut costs by reducing overseas trips and business-class flights, Kiso said. It has also been trimming office space.

Another sign of the turnaround in Japan has been growing interest in the firm from university graduates, with about 1,000 filing applications for its most recent internship program, Kiso said. The unit, which normally hires about 10 graduates each year, may increase the number to around 15 in 2020, he said.

By contrast, Japan’s biggest banks are becoming less attractive to school-leavers, according to Kiso, as they look to reduce headcount through initiatives such as the introduction of artificial intelligence.

©2018 Bloomberg L.P.