The UK bank has seen its sales of structured products almost double compared to the same period of last year despite a 27% fall from the previous quarter.
Barclays has increased its structured product sales in the US market to US$2.7 billion (474 products) in the third quarter of 2021, up by 48% from US$1.8 billion (602 products) in the same period of 2020, SRP data shows.
The UK bank continues to rank as one of the top five US issuer groups on the SRP league tables for Q3 21 and is preceded by Citi (US$3.4 billion/1,051), Goldman Sachs (US$3.2 billion/901) and JPMorgan (US$2.8 billion/1,191).
The bank’s issuance rose to US$1.9 billion (366 products) in the final quarter of 2020 and to US$3.5 billion (666 products) in Q1 21. This figure then rose US$3.8 billion (714 products) in the second quarter but fell by 27% in the following period.
In terms of underlyings, Barclays has issued almost US$1 billion sales of products tied to index basket structures during Q3 21, highlighting a 65% increase from the same period a year prior. Other dominant categories including single share (US$850m) and single index (US$524m) equities.
The bank has also widened its issuance tied to exchange-traded fund (ETF) assets in Q3 21 with US$178m in sales, compared with US$103m in the previous year. The best-selling structure for the period was the Trigger Autocallable Contingent Yield Notes - Worst of Option (06747X284).
Selling US$31m, this income note was distributed by UBS Financial Services and will reach maturity in five years. The product features a knock-out, worst of option and reverse convertible payoff type and tracks the SPDR S&P Regional Banking ETF and SPDR S&P 500 ETF Trust.
The product offers a quarterly coupon of 7.11% pa if each underlying is greater than or equal to 70% of its respective initial level on the observation date.
Europe
Barclays issued a total of 27 not-flow structured products across the European market during Q3 21 with concentrations in France, UK, Sweden, and Ireland. This can be compared with the 18 products that were issued in Q3 20 across similar markets with included Portugal and Belgium.
Most of the products are tied to the S&P EuroUSA 50 Low Carbon ESG Select Equal Weight 50 Point Decrement Index (one product /US$176m) with other popular underlyings being FTSE 100 (22 products/US$47m), Eurostoxx Banks (one product/US$7m), Eurostoxx 50 (one product/US$3m), and Barclays Mutual Fund ER AF 0% RC 2% SEK 3 Index (two products).
The products are wrapped as medium-term notes (22 products US$224), pensions (22 products/US$47m), Vies (two products/US$183m), ISAs (22 products/US$47m), and deposits (three products/US$8m). Asset classes include single index equities for about 25 of the structured products while two are tied to hybrid structures.
Key distributors of these products were MMA Assurances (one product/US$176m), MB Structured Investments (22 products/US$46m), BCP Asset Management (one product/US$3m), and Strukturinvest (two products).
In terms of maturities, 24 of the products are expected to expire in six years or more (US$212m), while 12 products have a medium-length tenor of three to six years (US$19m), and one product has a short-term tenor.
Dominant payoff types were knock-out (23 products/US$227), protected tracker (one product/US$176m), reverse convertible (21 products/US$48m), and snowball (two products/US$10m).
Apac
The UK bank was also active in the Japanese structured products market as a derivatives manufacturer with 13 structures marketed during the third quarter.
The products were distributed by nine different banks and securities houses including 82 Bank, Shinsei Bank, Shizuoka Bank, Okachi Securities and Kagawa Securities.
All the products sold by Barclays in Japan during the quarter were wrapped as notes with knockout and reverse convertible payoff structures – these included eight worst of option structures linked to baskets comprising the S&P 500 and Nikkei 225 indices. Barclays also marketed three callable, two dual currency and one power reverse dual currency structures in Q3 21.
The most featured underlying during the period on Barclays’ issuance were the Nikkei 225 and S&P 500 indices (eight products/US$143m) followed by the JOPY/USD currency pair and the Komatsu and Rakuten shares.
In South Korea, the UK bank sold eight equity linked securities (ELS) mostly knockout, worst of structures linked to shares including Advanced Micro Devices (four products/US$10.56m; General Motors (three products/US$9.89m); Boeing (two products/US$5.96m); NVIDIA (two products/US$6.79m); and Netflix (one product/US$6.07m).
Business Lines
Year-to-date, the bank led by its newly appointed chief executive C.S. Venkatakrishnan (pictured), has reported a total income of £16.7 billion (US$22.4 billion), compared with £16.8 billion in the previous year, while net interest income has increased by seven percent to total £5.8 billion.
Total operating expenses increased by 6% to £10.7 billion, due to structural cost actions of £392m primarily relating to the real estate review in Q2 21, higher performance costs that reflect improved returns, and continued investment and business growth.
Total income for Barclays International decreased by about 2% to £12.2 billion while operating expenses increased by 5% to value £7 billion.
Global markets income also decreased by 14% to £5.4 billion as a strong performance in Equities was more than offset by FICC. Equities income increased by 28% to £2.5 billion driven by strong client activity in derivatives and increased client balances in financing.
FICC income decreased by 33% to £2.9 billion due to tighter spreads and the non-recurrence of prior year client activity levels.
Risk-weighted assets across the group stand at £307 billion for the third quarter, compared to £310 billion in the same period a year prior.
Click to view the bank’s earnings release.