Corporate Investment Banking - Essay Example

Corporate Investment Banking The banking industry is changing with different products and services ensuring that the customers either personal or corporate get the most competitive deals in the industry. The banks are therefore looking for different ways to be attractive to their customers and innovative ideas that can help the company surpass their competitors in the industry. Corporate investment banking is one of the most important parts of a bank since it generates a lot of revenue for the bank thereby making it a core part of the banking industry. In illustrating the different concepts and fundamental structures of the corporate investment banking and the banking industry as a whole this paper uses the case of Barclays Bank one of the major multinational companies in the banking industry. Background information on Barclays Bank Barclays Bank is a multinational banking and financial services with operations in the retail, wholesale, investment banking, wealth management and mortgage lending and credit cards. It is a British company with the headquarters in London although it has branches and offices in all continents and major economies of the World. The bank boasts of over 48 million customers in over 50 countries worldwide and the total asset portfolio is well over 2 trillion dollars making it the seventh largest bank in the world based on assets (Barclays, 2015). The bank has a rich history with its fundamental origin being traced back to 1690 a factor that makes it one of the leading financial institutions in the world (Barclays, 2015). The company’s mission statement is to help people achieve their ambitions in the right way and measure and reward the company’s employees not only on commercial results but on how they pursue the company’s values in their daily activities. The company looks to be a global power in terms of the financial services and products delivery to all its customers. The company announced a profit before tax of £2,885m in 2014 that was a 29% increase from 2013 when it recorded £2,233m (Barclays, 2015). The total income increased by 1% to £8828M from the previous year. The company has been witnessing steady growth and is looking to diversify the different aspects of the company in different parts of the world to increase their level of income and sales. The bank attributes its success and extraordinary growth in the global market to the significant innovative strategies that the company has implemented over the years (Barclays, 2015). Organizational structure The company changed its organizational structure to offer better services and products to its customers in the different parts of the world. The cost of maintaining the previous structure were also considerably high and it adapted to a new structure that the company felt was sustainable and most of all good at service delivery. The structure consists of the Barclays Group that is the main Bank that controls all the other divisions and branches of the bank. The Barclays group is divided into five different parts that encompasses all the products and services of the bank to the different markets where the bank has set up (Barclays, 2015). The investment bank one of the divisions in the company’s structure and is concerned with advisory and facilitation of the best investments and investment plans for the customers. The company has an array of professionals that handle the different investments both in the offices and also on the field with exemplary skills to identify and advice the customers on the best investment decisions for their set goals and targets (Bloch, 2009, pg66). The Barclaycard is also part of the Barclays Group and forms an integral part in revenue generation and reaching out to the different people from all over the world. The Barclaycard is a revolutionary tool that has served people from all parts of the world with its easy payment services that the bank has and the different methods of services that the company offers through the Barclaycard (Barclays, 2015). It has been credited by the bank as one of the best innovations that has ensured that the company has served its customers efficiently over the years making it a popular tool amongst the members. The retail and Business Banking is also a major part of the company’s overall structure as it incorporates UK retail, corporate Banking and wealth (Walsh, 2012, pg109)). The UK retail and wealth have not been as large as the corporate section that serves members from all parts of the world that have attained a specific set of demands. There corporate banking is a main part of the bank as it serves the corporate that is the companies who have a large cash outlay and a lot of assets (Barclays, 2015). The corporate section is critically examined if there are any interests in investing in the bank since there is a need for transparency and a reflection of the company’s books before the services are offered. There is also Africa that is a main division in the company and looks to serve the Africa continent looking to get the company’s services to people in the African continent. Barclays has identified Africa as a growing market and is looking to stamp itself in the region and tap into the different markets that are available while also serving its customers well to ensure that the income generated from the region increases (Barclays, 2015). The Barclays Non-core is also part of the bigger Barclays Group and its main aspect is in the assessment of different company assets and judging their effect and influence of the achievement of the company’s goal (Barclays, 2015). The Non-core part is concerned with the assets that are nor strategically attractive to the company and may need to be disposed in order for the company to acquire better and more assets that may generate higher incomes for the company. The company’s key objectives The main objective of the company is in the rebalancing of the bank and repositioning for returns. There have been changes in the regulatory landscape that governs Barclays where there was a change in the regulatory landscape that shifted in regards to leverage in the past years and the bank needs to come up with ways to counter the effects of the shift. Additionally there was a change in the economic environment that led to the company losing out to due to the volatility of the markets in the world market over the past few years. The company therefore needs to come up with rebalancing Barclays and also reposition itself for returns in order for the company to deliver a return on equity above the cost of equity (Barclays, 2015). In rebalancing, the Bank has noticed that the investment bank has left the bank exposed to too many risks. The volatility of the market has been a major risk factor that has been affecting the Investment bank more than the other parts of the Barclays group. It is therefore important for the company to reduce the level of risks that the company is exposed through reducing the stake of the investment bank Group risk weighted losses (Barclays, 2015). The Bank is looking to strike the balance through having the personal and corporate banking being roughly the same size and the Barclaycard and Africa being the same size to strike the balance (Barclays, 2015). The company will increase its returns through building on the company’s strengths and improving the company’s capability on the market and also through improving on its weaknesses that it has identified earlier in the process. The bank is also looking to reshape itself and only have four divisions instead of the five divisions that it currently has. The bank will be divided into the aforementioned parts with the exception of Barclays Non-core that the bank is looking to eliminate. The bank will however revamp the existing divisions to increase the level of income generated from the different services and products offered. The Non-core part of the business is a part that the bank is looking to change and after an assessment of the different assets some of the businesses have been seen to produce less than the intended level of returns (Muro, 2008, pg74). These will be sold to other financial institutions or other people to ensure that the company gets a return on its investment and also lead to the company increasing and consolidating the assets into projects that generate revenue (Davey, 2011, pg102. The minimization of costs by the bank was also is also a main objective for the bank as it looks to increase its level of profits through a reduction in costs. The increase in the level of returns in future is also an objective of the bank as it looks to increase the number of equity and shareholders’ returns in the coming years (Kulbis and Scolje, 2007, pg231) . The company is looking to improve the level of returns that it gives to the shareholders in terms of dividends significantly in the coming years and develop a good platform for the employees to work on. Alignment of the investment Banker’s role in the Company’s objectives The company has identified some of the problems it’s facing especially due to the volatility of the markets and the regulatory framework that has been employed to leveraging. The main reason for volatility of the market to act as a major influence for the company is due to the fact that the investment bank has been actively involved and allocated a huge percentage of the risk levels that the bank is willing to compound (Williamson, 2008, pg71). This has raised problems for the bank as it has been too exposed to the outside market making it utterly impossible to increase their level of equity and rate of returns. Changing the level of Group Risk Weighted Assets from 50% to 30% in the investment will require the bank to have the best investment bankers to ensure that the system is fitted well and the customers do not get the backdrop of a poorly planned process (Epstein and Samuelson, 2012, pg56). The investment banker is therefore a key component of the Barclays Bank corporate banking structure if the company aims to change the level of Group Weighted Risk Assets and maintain its high level of service delivery. This is a process that will take more than a year to complete and having an investment banker that has the tools to envision the strategies that will help in coming up with these measures is critical to the company. The ideal role for this candidate in this company is to work as part of the Investment Banking research and analysis team. A graduate cannot be given a major position in a bank as large as Barclays but with the research tools and the eagerness to learn can be a good asset to the company in the research and assessment of the markets and investment sector (Terrry, 2012, pg103). Being given a role as a junior analyst within the investment bank will be essential to the graduate to acquire the necessary skills and different information that may be invaluable in the individual working for the company in future (Castillo and McNiff, 2007, pg97). The graduate should however be under the supervision of a senior analyst to help in ding the different concepts and also in the interpretation process of the results that the graduate may have compiled in the process of their work. The diversified portfolio of the bank and other investment Bank clients will offer the graduate with huge knowledge and information and ensure that they acquire the tools to be great analysts and investment bankers in future. 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