Mumbai: Barclays’ investment banking arm is still seeing good deal flows in India and Asia despite credit market turmoil, but globally it may shift some resources about to weather turbulence, senior executives said.
Barclays Capital, the investment bank unit of the British bank, aims to expand business in the United States and Asia, with growth seen not only in Japan, China and India, but also Vietnam, Indonesia, Cambodia, Sri Lanka and Mongolia, Vice Chairman David Wright told Reuters in an interview on Thursday.
While Barclays did not see “tremors or dislocation” in closing recent financing deals in India, borrowers looking to tap the Asian bond market were waiting to see if corporate bond spreads stabilised, the head of investment banking for India, Raju Shukla, said in the joint interview.
But the Asian syndicated loan market had not been hit severely and overall the deal pipeline remained healthy.
“We still are seeing a good deal flow in India as well as Asia,” Shukla said.
Barclays has suffered in recent weeks from concern its investment banking unit may be more exposed than rivals to complex debt vehicles. It said this week BarCap had traded profitably in August despite market turmoil.
Asked if BarCap would have to rethink its structured product business after the recent turbulence, Wright said the past two months had been “very tough”, but that would not prompt it to turn its back on its existing business model.
“Inevitably, you redeploy your forces and you redeploy your activities into areas which are going to be more productive in the immediate future,” Wright said.
Areas of interest included China, where China Development Bank, one of the country’s three policy lenders, which has taken a 3% stake in Barclays.
“We have got now a very good platform for building on with China -- with the China Development Bank - that’s going to absorb a lot of resource,” Wright said.
“When you look at the region and the three main economies of the region -- Japan, China and India -- there just is a continuing set of opportunities which were there before July and will carry on being there from September onwards.”
Wright, in Mumbai for a banking conference, said he was bullish on India, where key businesses -- financing and risk management -- had grown strongly, hoisting Barclays from being a very small player in 2002 to an established financier today.
BarCap raised about $6 billion for Indian corporates in 2006 and, in the first half of this year, the sum had already crossed $7 billion, Shukla said.
Shukla, who is based in Singapore, said deals included a $250 million syndicated loan for Jindal Stainless and BarCap was in the market for Tata Power’s $950 million term financing to buy stakes in Indonesian PT Bumi Resources Tbk’s two coal mines.
“Indian bank participation is strong in all (recent deals), but so is the non-Indian bank participation. The bank community still has appetite for good assets in Asia,” Shukla said.
He said potential market borrowers were being cautious.
“People are obviously watching, because the whole situation, if I can say, is evolving,” he said, referring to India and Asia.
“Likewise in the convertible bond market, which was quite active in the first half, there is a slowdown now because investors are also waiting to see how the markets stabilise.”