The UK bank saw its sales of SEC-registered structured notes rebound in 2023 following a significant slowdown in activity in the previous year.

Barclays' US structured products sales volume reached US$10.2 billion following a peak in the third quarter on the back of 2,851 new products, a robust recovery from the US$4.6 billion in 2022 which was marred by the over-issuance of securities.

However, the Q4 23 results still reflected a 20.1% decline from US$12.7 billion recorded in 2021.

As a result, Barclays Bank closed the year as the fourth largest issuer and the only non-US bank in the top five, trailing behind J.P. Morgan (US$16.9 billion), Citigroup (US$11.6 billion) and Goldman Sachs (US$11.4 billion).

Barclays continued to deliver the largest average ticket size in the US market at US$3.6m, despite a slight decline from US$3.7m in 2022. In contrast, the top three issuers posted US$2.2m, US$2,7m and US$3.1m, respectively, in 2023.

Bank of America saw its average ticket size halved to US$3.4m in 2023 while its total sales of SEC-registered notes increased 40% to US$7.1 billion year-on-year (YoY).    

Barclays average ticket size was bolstered by the Synthetic Convertible Notes - Alphabet (06741W7A2), which was sold US$450m in August – this product became the best-seller in the entire market during the year.

Despite being principal-protected, the three-year note was initially offered at a 8.9% premium and provides a fixed coupon of 4.0% pa. It features a settlement value based on the adjusted volume-weighted average price (VWAP) of Alphabet stock on the sole valuation date - 21 August 2026. 

Excluding the deal, the average ticket at Barclays' came to US$3.4m.  

The next two best-selling products Barclays’ shelf were also linked to single stocks, featuring the same investment period and similar payoffs. The Dual Directional Buffered PLUS - S&P 500 (06745MSK5) which is capital-at-risk and offers a 150% participation rate on the S&P 500 with a two-year tenor, is the only index-linked note among the top five best-sellers in the US.

By underlying type, Barclays’ issuance during the quarter was predominantly tied to indices, particularly index baskets, which alone accounted for 41.2% of its total sales in 2023. Single stocks on the other hand formed 21.8% of the total, or US$2.2 billion, – the proportion is higher than the top three issuers, which respectively posted 10.3%, 13.9% and 10.4%, and only fell behind UBS’s 36.9%.

Earnings

Barclays Group reported attributable profit of £4.27 billion (US$5.39 billion) for 2023, down 15% YoY, while total income increased two percent to £25.4 billion in total income. Total operating expenses were largely unchanged at £16.9 billion, according to its annual report for 2023 released yesterday (20 February).

In the fourth quarter, attributable loss of £0.1 billion was recorded after the bank took £0.9bn of structural cost actions, including initiatives across people, property and infrastructure.

Excluding the structural cost and the over-issuance of securities in the prior year, the group would deliver £7.5 billion profit before-tax for 2023, compared with £7.7 billion for 2022.

Specifically, the bank booked £292m income gain and £966m litigation and conduct charge in 2022 from the over-issuance of securities under its US shelf registration statements on Form F-3 filed with the SEC in 2018 and 2019.

The incident has impacted the business at equities unit within global markets, Barclays corporate and investment bank and Barclays International.

For the year, global markets contributed £7.2 billion in income, comprised of £2.4 billion equities and £4.8 billion fixed income currency and commodities (FICC). It represented 65.5% of the total income at Barclays investment bank.

‘In 2023 Barclays delivered solid performance against a mixed macroeconomic backdrop, meeting its financial targets. Our strong 13.8% Common Equity Tier 1 (CET1) ratio enables us to deliver increased total capital distributions of £3 billion to shareholders, up c.37% on 2022, which includes a further share buyback of £1 billion,’ said CEO C. S. Venkatakrishnan (pictured).

Click the link to read the Barclays full year 2023 results and resegmentation document.

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