1 00:00:00,040 --> 00:00:02,840 Speaker 1: Barclay's unvearning a share buyback plan worth more than nine 2 00:00:02,880 --> 00:00:05,160 Speaker 1: hundred and sixty million US dollars This coming is the 3 00:00:05,200 --> 00:00:08,600 Speaker 1: British lender reported better than expected second quarter investment banking 4 00:00:08,640 --> 00:00:12,119 Speaker 1: revenue and boosted its guidance for the full year. Joining 5 00:00:12,160 --> 00:00:15,680 Speaker 1: us now is the Barclay CEO CS ven Karatea Krishna 6 00:00:15,840 --> 00:00:16,239 Speaker 1: ven Katta. 7 00:00:16,200 --> 00:00:17,600 Speaker 2: It's great to catch up with you, sir. 8 00:00:17,920 --> 00:00:20,720 Speaker 1: Once again, I will go through the numbers so you 9 00:00:20,760 --> 00:00:24,200 Speaker 1: could be modest and you don't have to Equity underwriting booming. 10 00:00:24,520 --> 00:00:26,119 Speaker 2: Equity's trading up nicely. 11 00:00:26,200 --> 00:00:29,840 Speaker 1: The stock is up by something like fifty percent year today, Venkat. 12 00:00:29,920 --> 00:00:31,640 Speaker 1: There was some weakness in thick trading that I want 13 00:00:31,640 --> 00:00:33,120 Speaker 1: to get to in just a moment. But let's start 14 00:00:33,159 --> 00:00:36,040 Speaker 1: with the position of strength you're in Equity's trading. Where 15 00:00:36,040 --> 00:00:38,480 Speaker 1: did that strength come from, Venkat? And do you expect 16 00:00:38,520 --> 00:00:40,000 Speaker 1: it to continue through the year. 17 00:00:42,760 --> 00:00:45,640 Speaker 3: Well, thank you for asking me to join the program. 18 00:00:45,720 --> 00:00:48,280 Speaker 3: I'm very grateful to be here. And as you say, 19 00:00:48,760 --> 00:00:52,280 Speaker 3: we are in the process of delivering on the investor 20 00:00:52,360 --> 00:00:54,400 Speaker 3: plan that we laid out in February of this year, 21 00:00:54,880 --> 00:00:57,880 Speaker 3: which was to have a simpler, bitter, more balanced bank 22 00:00:58,120 --> 00:01:00,600 Speaker 3: a bank that returns twelve percent hour to e and 23 00:01:00,720 --> 00:01:04,080 Speaker 3: above by twenty twenty six, returning about ten billion pounds 24 00:01:04,120 --> 00:01:07,720 Speaker 3: to shareholders by twenty twenty six and more, and then 25 00:01:07,920 --> 00:01:10,959 Speaker 3: rebalancing the bank so that the investment bank goes from 26 00:01:10,959 --> 00:01:13,199 Speaker 3: around sixty percent of the bank to around fifty percent 27 00:01:13,200 --> 00:01:15,480 Speaker 3: of the bank. One part of the investment bank is 28 00:01:15,480 --> 00:01:18,200 Speaker 3: our market's business and the equity business, which you highlight. 29 00:01:19,080 --> 00:01:19,959 Speaker 2: We've always had a. 30 00:01:19,880 --> 00:01:22,919 Speaker 3: Great strength and equity and I think as equity markets 31 00:01:23,000 --> 00:01:26,080 Speaker 3: themselves have gone through the changes that you've seen in 32 00:01:26,120 --> 00:01:28,959 Speaker 3: this since the start of this year, our traders have 33 00:01:29,000 --> 00:01:32,600 Speaker 3: been able to capitalize on client demand, on increasing volatility 34 00:01:32,959 --> 00:01:36,399 Speaker 3: and providing the kind of innovative derivative solutions they seek 35 00:01:36,680 --> 00:01:40,120 Speaker 3: clients seek from Barclays and I do expect as market 36 00:01:40,200 --> 00:01:44,480 Speaker 3: volatility keeps the pace for our performance in equities to continue. 37 00:01:44,760 --> 00:01:47,480 Speaker 1: While we're seeing that same strength in sick trading VENCAT, 38 00:01:47,600 --> 00:01:50,240 Speaker 1: I wonder what you can do to turn things around 39 00:01:50,280 --> 00:01:52,520 Speaker 1: in that particular part of the business. 40 00:01:54,960 --> 00:01:58,520 Speaker 3: So within FEC, we are a very very strong credit 41 00:01:58,560 --> 00:02:02,280 Speaker 3: house and typically in the top three. One of the 42 00:02:02,320 --> 00:02:04,880 Speaker 3: reasons in fig that in the market and for us, 43 00:02:04,920 --> 00:02:07,360 Speaker 3: it affects US. Maybe a little more is that credit 44 00:02:07,400 --> 00:02:09,920 Speaker 3: spreads have been muted and credit volatility has been muted, 45 00:02:10,000 --> 00:02:13,639 Speaker 3: quite the opposite case from equities. In European rates, which 46 00:02:13,680 --> 00:02:15,760 Speaker 3: is an area of growth for US, we've improved from 47 00:02:15,800 --> 00:02:19,000 Speaker 3: the first quarter to the second quarter, and securitized products, 48 00:02:19,000 --> 00:02:21,800 Speaker 3: which is an important part of fixed income, is growing 49 00:02:21,800 --> 00:02:26,280 Speaker 3: from strength to strength. So our fit performance is improved 50 00:02:26,280 --> 00:02:28,120 Speaker 3: from the first quarter to the second and I could 51 00:02:28,160 --> 00:02:31,000 Speaker 3: expect to continue to see more of that improvement as 52 00:02:31,000 --> 00:02:31,760 Speaker 3: the year goes on. 53 00:02:32,040 --> 00:02:34,360 Speaker 4: Venkatte, We've been having a debate for several months now. 54 00:02:34,480 --> 00:02:37,240 Speaker 4: Are rate cuts good or bad for banks? Or rate 55 00:02:37,320 --> 00:02:41,480 Speaker 4: hikes good or bad for banks? Are rate cuts broadly 56 00:02:41,760 --> 00:02:45,000 Speaker 4: good or bad for your profitability at a time when 57 00:02:45,040 --> 00:02:46,760 Speaker 4: a lot of people are expecting them globally? 58 00:02:47,960 --> 00:02:48,760 Speaker 2: Thank you and Mark. 59 00:02:50,080 --> 00:02:52,720 Speaker 3: So what I would say is very special about this 60 00:02:52,840 --> 00:02:56,840 Speaker 3: rate cycle is that the what we're expecting is not 61 00:02:56,960 --> 00:03:00,120 Speaker 3: a spate of cuts, but fine tuning adjustments. So the 62 00:03:00,200 --> 00:03:02,280 Speaker 3: answer to your question is, I don't think they'll make 63 00:03:02,320 --> 00:03:03,960 Speaker 3: that much of a difference to. 64 00:03:03,880 --> 00:03:05,720 Speaker 2: A bank like ours or to the large banks. 65 00:03:06,280 --> 00:03:06,480 Speaker 3: You know. 66 00:03:06,560 --> 00:03:07,440 Speaker 2: My colleague A. J. 67 00:03:07,639 --> 00:03:10,160 Speaker 3: Raja at Thyaksha, who runs in macro research for US 68 00:03:10,560 --> 00:03:14,320 Speaker 3: often says a rate cycle is when you go up 69 00:03:14,360 --> 00:03:17,200 Speaker 3: in an escalator meaning slow cuts, and come down in 70 00:03:17,240 --> 00:03:20,240 Speaker 3: an elevator slow rises and then fast cuts coming down 71 00:03:20,280 --> 00:03:23,520 Speaker 3: in an elevator. What we've seen this time is we 72 00:03:23,560 --> 00:03:26,800 Speaker 3: went up in an elevator, meaning very fast rate hikes, 73 00:03:27,200 --> 00:03:29,520 Speaker 3: and we may be coming down by the stairs. So 74 00:03:29,560 --> 00:03:31,600 Speaker 3: you saw a fine tuning adjustment by the Bank of 75 00:03:31,639 --> 00:03:36,120 Speaker 3: England this morning. You saw the FED pause, but they're 76 00:03:36,280 --> 00:03:39,120 Speaker 3: indicating they may go later this year. All of these 77 00:03:39,160 --> 00:03:42,200 Speaker 3: things are just trying to adjust interest rates by a 78 00:03:42,240 --> 00:03:45,600 Speaker 3: small amount because real rates have crept up at a 79 00:03:45,600 --> 00:03:48,560 Speaker 3: constant inflation which is two percent, which is low. But 80 00:03:48,680 --> 00:03:53,040 Speaker 3: it's just trying to overcome the slight impediment of rising 81 00:03:53,080 --> 00:03:55,440 Speaker 3: real rates. So I don't expect this to have much 82 00:03:55,440 --> 00:03:57,720 Speaker 3: of an effect on the banking sector, if any, and 83 00:03:57,800 --> 00:03:59,800 Speaker 3: certainly we are not changing the way we view the 84 00:03:59,800 --> 00:04:01,960 Speaker 3: world world because of this modest rate cut. 85 00:04:02,160 --> 00:04:04,120 Speaker 4: In the meantime, you say that you are on track 86 00:04:04,200 --> 00:04:07,800 Speaker 4: to achieve one billion pounds in cost cuts. There is 87 00:04:07,840 --> 00:04:11,200 Speaker 4: sort of some swirling questions around where those cost cuts 88 00:04:11,240 --> 00:04:14,200 Speaker 4: are coming from. Is it simply just being more efficient 89 00:04:14,200 --> 00:04:17,120 Speaker 4: in certain sectors, is it ongoing job cuts. 90 00:04:17,400 --> 00:04:19,400 Speaker 2: What are you executing? 91 00:04:21,279 --> 00:04:24,279 Speaker 3: So we did a billion pounds worth of structural cost 92 00:04:24,320 --> 00:04:27,800 Speaker 3: actions last year. We're seeing a the benefits of some 93 00:04:27,880 --> 00:04:30,480 Speaker 3: of that. B We're seeing the benefits of a greater 94 00:04:30,600 --> 00:04:34,200 Speaker 3: focus on productivity and efficiency in the way in which 95 00:04:34,240 --> 00:04:36,600 Speaker 3: we run the bank. And what we are also seeing 96 00:04:37,200 --> 00:04:41,000 Speaker 3: is the results of investments which we have made, particularly 97 00:04:41,000 --> 00:04:44,440 Speaker 3: in markets, particularly in trading technology. I'm talking to you 98 00:04:44,480 --> 00:04:47,960 Speaker 3: from our equity trading flow in London and the way 99 00:04:48,000 --> 00:04:50,880 Speaker 3: we have increased our market share and electronic trading here 100 00:04:50,880 --> 00:04:53,360 Speaker 3: in Europe and in the US is all a result 101 00:04:53,360 --> 00:04:55,800 Speaker 3: of past investment. You have to continue to do it, 102 00:04:56,080 --> 00:04:58,159 Speaker 3: but it's probably at a slower pace than we did 103 00:04:58,240 --> 00:05:02,000 Speaker 3: in the last couple of years. Its efficiency and better investment. 104 00:05:02,120 --> 00:05:04,080 Speaker 1: Can I ask you about the advisory business with that 105 00:05:04,160 --> 00:05:06,440 Speaker 1: in mind, how is that going? How's the turnaround going 106 00:05:06,480 --> 00:05:07,039 Speaker 1: in that unit? 107 00:05:09,880 --> 00:05:13,599 Speaker 3: So, investment banking we've done, as you've seen the results 108 00:05:13,600 --> 00:05:17,520 Speaker 3: in the banking side quite strongly. Equity capital markets did 109 00:05:17,640 --> 00:05:21,240 Speaker 3: very well, advisories improving. We still have a little way 110 00:05:21,279 --> 00:05:25,440 Speaker 3: to go. We are seeing deal volume pickup, we're seeing 111 00:05:25,440 --> 00:05:28,760 Speaker 3: our backlog increasing and I think over time, as some 112 00:05:28,800 --> 00:05:32,120 Speaker 3: of these ideas fructify, you will see an improvement in 113 00:05:32,120 --> 00:05:33,080 Speaker 3: the advisory numbers. 114 00:05:33,560 --> 00:05:35,400 Speaker 1: I'd love your view, Ven Kaunt on how business is 115 00:05:35,440 --> 00:05:38,279 Speaker 1: going more generally as you look across Corporate America and 116 00:05:38,320 --> 00:05:40,719 Speaker 1: corporations across Europe. I can share with you some of 117 00:05:40,760 --> 00:05:42,960 Speaker 1: the comments we've heard from Corporate America over the last 118 00:05:43,000 --> 00:05:46,040 Speaker 1: couple of weeks from P ANDNG. They're seeing slower price increases. 119 00:05:46,440 --> 00:05:49,400 Speaker 1: Kimberly Clark also saying the same thing. McDonald's are talking 120 00:05:49,440 --> 00:05:52,719 Speaker 1: about the first sales slide since twenty twenty. Pepsi saying 121 00:05:52,760 --> 00:05:55,760 Speaker 1: the consumer is becoming more challenged. You've got a massive 122 00:05:55,760 --> 00:05:58,840 Speaker 1: consumer business as well with the barcleaycart business. When you 123 00:05:58,880 --> 00:06:01,520 Speaker 1: look at corporations and the consumer, are you seeing the 124 00:06:01,560 --> 00:06:04,920 Speaker 1: same kind of slow down? VENCA from your vantage point. 125 00:06:07,400 --> 00:06:09,440 Speaker 3: So, what we are seeing and which is good for 126 00:06:09,480 --> 00:06:12,280 Speaker 3: the credit performance of banks, is we are seeing both 127 00:06:12,320 --> 00:06:17,520 Speaker 3: consumers and corporates focusing on efficiency and managing their budgets 128 00:06:17,560 --> 00:06:20,320 Speaker 3: more carefully. So if you are in the consumer business, 129 00:06:20,360 --> 00:06:23,400 Speaker 3: and if you're a consumer oriented company, what you will 130 00:06:23,480 --> 00:06:27,520 Speaker 3: see is therefore a lack of pricing power and then 131 00:06:27,560 --> 00:06:32,040 Speaker 3: people economizing. We see that in our own customers. What 132 00:06:32,080 --> 00:06:35,360 Speaker 3: that means though, is that even though employment is still 133 00:06:35,440 --> 00:06:38,320 Speaker 3: very strong both in the UK and the US, people 134 00:06:38,320 --> 00:06:41,120 Speaker 3: are managing their budgets more carefully, which is one of 135 00:06:41,160 --> 00:06:44,680 Speaker 3: the reasons why buy and large credit impairment costs for 136 00:06:44,720 --> 00:06:48,479 Speaker 3: banks have been relatively well controlled. So it's good for 137 00:06:48,560 --> 00:06:50,720 Speaker 3: the consumer to do this and manage their budgets. 138 00:06:51,040 --> 00:06:52,840 Speaker 2: It's good for their lenders. 139 00:06:52,680 --> 00:06:57,240 Speaker 3: Because they're seeing less signs of consumer distress. It's good however, 140 00:06:57,720 --> 00:07:00,560 Speaker 3: it's for their economy. However, their are winners and losers, 141 00:07:00,960 --> 00:07:03,080 Speaker 3: and that's what you're seeing from some of the people 142 00:07:03,080 --> 00:07:03,640 Speaker 3: you're quoting. 143 00:07:03,960 --> 00:07:06,600 Speaker 4: Are you seeing a big difference in terms of consumer 144 00:07:06,680 --> 00:07:10,000 Speaker 4: strength globally depending on the region. We've been talking a 145 00:07:10,000 --> 00:07:13,520 Speaker 4: lot about how the consumer shows a lot of I 146 00:07:13,560 --> 00:07:16,280 Speaker 4: guess restraint when it comes to spending, but more so 147 00:07:16,760 --> 00:07:20,800 Speaker 4: in some of the sector is more leverage to Chinese consumers. 148 00:07:20,840 --> 00:07:23,239 Speaker 4: How much you see in Europe in a weaker spot 149 00:07:23,280 --> 00:07:24,800 Speaker 4: than say the US. 150 00:07:28,280 --> 00:07:31,880 Speaker 3: Well, I think I think the slowdown which we've seen 151 00:07:31,960 --> 00:07:35,480 Speaker 3: in China is palpable, and what Chinese demand has done 152 00:07:36,000 --> 00:07:38,840 Speaker 3: is affected sectors which were particularly exposed to them. You 153 00:07:38,880 --> 00:07:41,960 Speaker 3: saw some of it in the fashion goods industry and 154 00:07:42,080 --> 00:07:47,000 Speaker 3: tech of course, is a different situation because you know 155 00:07:47,040 --> 00:07:50,000 Speaker 3: the trade with China is being limited in tech for 156 00:07:50,040 --> 00:07:52,760 Speaker 3: other reasons. But I do think that what you will 157 00:07:52,800 --> 00:07:56,280 Speaker 3: see as people with that exposure to China being more affected. 158 00:07:56,320 --> 00:07:58,240 Speaker 3: You've already seen it in the numbers and that I 159 00:07:58,280 --> 00:08:00,000 Speaker 3: expect that you'll see that for some time to come. 160 00:08:01,000 --> 00:08:02,960 Speaker 4: How much does it affect where you're expanding or where 161 00:08:02,960 --> 00:08:03,760 Speaker 4: you're not expanding. 162 00:08:06,280 --> 00:08:10,560 Speaker 3: Well, Barclay's is a first and foremost a consumer bank 163 00:08:10,640 --> 00:08:16,200 Speaker 3: in the UK, a global investment bank, and so got 164 00:08:16,200 --> 00:08:19,280 Speaker 3: a very strong corporate presence and a wealth presence. But 165 00:08:19,440 --> 00:08:24,640 Speaker 3: all of that is very highly connected to London, from Europe, 166 00:08:24,800 --> 00:08:28,400 Speaker 3: from the United States, and then from India, Singapore, Hong Kong. 167 00:08:29,200 --> 00:08:32,240 Speaker 3: We are not a major presence in mainland China, and 168 00:08:32,280 --> 00:08:34,760 Speaker 3: so what we think is that the impact of what's 169 00:08:34,760 --> 00:08:39,000 Speaker 3: happening in China is relatively more muted for US compared 170 00:08:39,000 --> 00:08:40,640 Speaker 3: to other banks with larger exposures. 171 00:08:41,120 --> 00:08:42,800 Speaker 4: It has raise a question though about some of the 172 00:08:43,200 --> 00:08:46,800 Speaker 4: tensions that have been coming to the fore politically internationally, 173 00:08:46,840 --> 00:08:52,040 Speaker 4: in terms of potential tariffs, potential restrictions, changing policies, the elections. 174 00:08:52,160 --> 00:08:53,760 Speaker 4: How are you trying to get ahead of that at 175 00:08:53,800 --> 00:08:55,760 Speaker 4: a time where there's a lot of policy uncertainty, and 176 00:08:55,840 --> 00:08:59,800 Speaker 4: arguably that's one reason why advisory and mergers and acquisitions 177 00:08:59,840 --> 00:09:03,080 Speaker 4: have been as robust as some people had expected it 178 00:09:03,120 --> 00:09:03,280 Speaker 4: to be. 179 00:09:06,760 --> 00:09:08,440 Speaker 3: It's a very very good point, and I think the 180 00:09:08,480 --> 00:09:11,760 Speaker 3: big area where all that comes into play is cross 181 00:09:11,760 --> 00:09:15,240 Speaker 3: border m and A and cross border transactions. You've even 182 00:09:15,280 --> 00:09:18,160 Speaker 3: seen a slowdown of that within Europe itself, you know. 183 00:09:18,280 --> 00:09:21,200 Speaker 3: For us, it highlights one of the things which we've done, 184 00:09:21,200 --> 00:09:23,360 Speaker 3: which is we decided very early this year when we 185 00:09:23,360 --> 00:09:26,000 Speaker 3: did our investorday and made the decision towards the end 186 00:09:26,000 --> 00:09:28,600 Speaker 3: of last year to invest thirty billion pounds of risk 187 00:09:28,600 --> 00:09:31,840 Speaker 3: created assets in the UK. The UK has had its election, 188 00:09:32,320 --> 00:09:35,320 Speaker 3: We've elected a business friendly government. The transition has been 189 00:09:35,360 --> 00:09:39,160 Speaker 3: smooth and it points to the importance for banks like 190 00:09:39,320 --> 00:09:43,720 Speaker 3: us to be in places with very clear economic policy, 191 00:09:43,800 --> 00:09:47,240 Speaker 3: the good rule of law, growth and stable governments and 192 00:09:47,240 --> 00:09:48,560 Speaker 3: stable economic policies. 193 00:09:49,000 --> 00:09:51,160 Speaker 1: Venkat the year is going well. Hopefully next time you're 194 00:09:51,200 --> 00:09:52,600 Speaker 1: in New York we can catch up again here in 195 00:09:52,600 --> 00:09:55,120 Speaker 1: the studio. I appreciate your time this morning, sir. Thank you. 196 00:09:55,240 --> 00:09:59,480 Speaker 1: The Barclay CEO CS ven Kara Krishna, the Barclay stock 197 00:09:59,520 --> 00:10:00,600 Speaker 1: is up more fifty percent. 198 00:10:00,640 --> 00:10:02,480 Speaker 2: It's quite a year so far for Barclays. 199 00:10:02,520 --> 00:10:06,680 Speaker 4: They've also pledged seven hundred and fifty million pounds being 200 00:10:06,720 --> 00:10:10,200 Speaker 4: returned to shareholders, so quite big in terms of dividend payments.