Barclays traders made over $600m in emerging-market havoc
Performance should help it offset a slide in dealmaking activity and keep pace with Wall Street rivals.
By Stefania Spezzati, Laura Benitez and Abhinav Ramnarayan, Bloomberg
25 Apr 2022 22:23
Image: Simon Dawson/Bloomberg
Barclays Plc saw a surge in emerging-markets trading last quarter, with revenue climbing to about 500 million pounds ($644 million) amid volatility spurred by Russia’s invasion in Ukraine.
The increase came as the bank’s traders seized on turbulent currency markets and big moves in credit-default swaps, according to people familiar with the performance, who asked not to be identified because the firm has yet to report first-quarter results. The bank is due to post its latest earnings on April 28.
The surge indicates Barclays traders may have navigated a quarter that saw banks’ trading desks benefiting from higher activity but also facing potential blowups amid fast-moving markets. The London-based lender made 1.2 billion pounds in revenue from overall fixed-income, currency and commodities trading in the first three months of 2021, and industry analysts say emerging markets typically account for less than a quarter of FICC revenue at major banks.
Emerging markets currencies and rates trading generated about 400 million pounds last quarter, with roughly half coming from bets on currencies from Central and Eastern Europe, the Middle East and Africa, the people said.
Barclays’s emerging markets credit desk made about 100 million pounds, much of it on the surge in Russian and Ukrainian credit default swaps, they said.
A spokesperson for Barclays declined to comment.
The performance should help Barclays offset a slide in dealmaking activity and keep pace with Wall Street rivals that have managed to maintain or even grow revenues from FICC trading in the first quarter.
Markets were roiled during the period by the Ukraine war as well as global efforts to temper inflation by hiking interest rates. The cost of insuring Russia’s debt against default for five years rose 1,100% in the quarter, with prices whipsawing daily, according to data compiled by Bloomberg.
Russia breached the terms of two bonds last month, which could trigger as much as $40 billion in credit-default swaps if the sanctioned country doesn’t pay bondholders in dollars before the debt’s grace period ends on May 4.
The Russian ruble lost more than 10% against the dollar in the first quarter, while the Ukrainian hryvnia declined about 7%, according to data compiled by Bloomberg.
“Volatility is a good thing, but you must be careful what you wish for,” Barclays Chief Executive Officer C.S. Venkatakrishnan said in March, when he signaled that large-scale deals and initial public offerings had slowed following the Ukrainian invasion.