Lehman buy has put us in the top league

Written by Rachana Khanzode | Updated: Jul 2 2009, 09:16am hrs
Cyrus Ardalan
London-based Barclays Capitals vice-chairman, Cyrus Ardalan says that acquisition of Lehman Brothers has made it a top-brass firm specialising in asset management, mergers & acquisitions and cash equity. In an exclusive interaction with FEs Rachana Khanzode, he brings forth the current scenario at international investment banks. Excerpts:

At what stage of the global economic crises are we

Governments and institutions have taken substantial measures and we have seen financial markets stabilising with the rise in stock markets, expansion in liquidity, credit spreads coming down and banks beginning to access the international markets. Although positive signs are coming from India and China, still the real economy remains weak. Thus we need to be very cautious especially during the last quarter of this year and make sure there are no significant setbacks in this period.

What is the scenario with the financial markets

Bank lendings have contracted. Security markets are constrained and capital markets are facing difficulties. The cost of buying credit is going up. Banks have issued equity and they are raising funds to pay back the government. Plus they are more selective in lending. They are revisiting their internal risk policies and generally increasing the demand of capital to have a stronger position. Going ahead we expect the banks lending policies to remain constrained and international banks to remain selective in lending. The securities markets will continue to open up slowly, if there are no setbacks. There is a weakness in regulatory environment which needs to be addressed particularly having a systematic approach towards macro regulatory focusing on prudential analysis and looking at individual banks.

What impact did the downturn have on Barclays

Barclays is one of the few banks that could avoid government support. We have been profitable through out last year and continue to be this year. We acquired the US business of Lehman Brothers. We sold Barclays asset management business for $13.5 billion to strengthen our capital base and retained 20% interest in BlackRock that bought this business. We continue to expand our investment banking business this year throughout Europe and Asia and India remains a priority. In India we are dealing with major corporations, working on financing, risk management and M&A, and increasing equity business. In US and Europe we are focusing on debt financing. Activity in Bourne markets is high.

Is the process of integrating Lehman complete and how has it helped Barclays

Barclays Capital bought Lehmans US business, technology, infrastructure, including the 10,000 employees that were fully integrated in three months and the business is working seamlessly. The results are that among the international banks we have become one of the prominent banks in the US. After the Lehman acquisition we are third or fourth in Mergers & Acquisition (M&A) and cash equity space in US and building that out internationally.