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ABA
July 07, 2017  

Barclays to Recommence Trading in Europe

Barclays is back in the business of trading asset- and mortgage-backed bonds in Europe.

The push got under way this week with the hiring of former Credit Suisse staffer Pratik Gupta. He oversees trading of all mortgage bonds, along with floating-rate paper backed by consumer assets — including credit-card receivables, auto loans and personal loans.

It’s unclear how many more additions are planned, although Barclays representatives were telling attendees of the annual “Global ABS” conference in Barcelona last month that the bank would take steps to become an active player in the coming weeks. That event was hosted by the Association for Financial Markets in Europe and Information Management Network.

Although Barclays never officially stopped trading European structured products, sources have characterized it as largely absent from the secondary market in recent years. “They were not really doing anything,” one buysider said. “The only thing they made any effort on was [collateralized loan obligations], and even there the thinking was they might not be there if the market turned sour.”

The pullback began with the July 2015 exit of head trader Stuart Calnan. Soon after, Barclays laid off head salesman Christopher Carnell, head researcher Christian Aufsatz and at least three junior employees — reductions that would be mirrored at many other banks.

Gupta himself was a victim of an early-2016 move by Credit Suisse to shutter its structured-product sales and trading desk in Europe. He had joined the bank in 2014 from RBS, and since his exit was employed at private equity firm Park Street Advisors.

Barclays, meanwhile, had handed the reins to David Garratt, a trader specializing in fixed-rate bonds denominated in British pounds. While his book included some mortgage paper, sources described it as consisting mainly of corporate securities. There’s no word on how his coverage meshes with Gupta’s.

As an underwriter, Barclays has been more active. It ranked fifth among bookrunners for European structured-product offerings during the first half of 2017, moving up from 12th a year earlier (see table on Page 14).

On the secondary market, the thought is that other banks could build up as well. They’ll likely move cautiously, however, as overall trading volume remains light and uncertainty continues to surround regulatory matters including the Bank for International Settlements’ Fundamental Review of the Trading Book. “The feeling is that the cutbacks went a little too far, and now some of them will do some hiring,” another buy-side source said.