A Cohesive Approach to Investment and Corporate Banking

An interview with Chris van Niekerk, Managing Director, Multinational Corporates, Barclays Corporate 

Barclays Corporate as a brand was launched earlier this year, the new face to market of a corporate bank that had been realigned internally to bring the operation even closer to the group’s investment bank, Barclays Capital. In this interview, Barclays Corporate’s Chris van Niekerk, Managing Director, Multinational Corporates, discusses how the corporate and investment bank work together to provide a full banking solution for large corporate clients.

To what extent are the client bases of Barclays Corporate and Barclays Capital already aligned?

There is already a substantial overlap between the client bases, as the two businesses have worked together closely for the past 10 years plus as part of a long-term strategy to develop greater synergy and breadth of services for our clients. We now have relationships with a substantial group of global multinationals, underpinned by a commitment of capital. However, although Barclays Corporate and Barclays Capital have many common clients, these relationships need to be managed on a variety of levels. Typically, the parent company is responsible for investment banking activities, so we endeavour to maintain close contact with the CFO, Group Treasurer and, for strategic issues, the CEO. Where Barclays adds incremental value, however, is Barclays Corporate’s ability to provide corporate banking services, not only to a company’s head office but also to manage subsidiary requirements, such as for a UK subsidiary of a US-parented multinational.

Before the crisis, we saw that multinational corporations were seeking a single, global bank partner, but companies are now adopting a different approach. What is your experience of this?

Since the crisis, treasurers’ perception of counterparty risk has changed substantially, and companies recognise that it is not necessarily in their interests to concentrate aspects of their banking services with a single provider. However, this is not the only driver for a treasurer to seek a trusted panel of banks rather than one global bank. First, the ‘integrated’ nature of corporate-to-bank relationships is now widely recognised i.e., if a bank is committing capital, that bank would also aim to expand its business with a client into other, ancillary areas. As companies work with a panel of core banks, they therefore will often seek to assign their cash management, trade business etc. across these banks, where the banks have the relevant competencies. Secondly, every bank is differentiated by its geographic reach and product expertise, so treasurers want to ensure that they are obtaining the best in class services in each region (or product) in which they do business. For example, one reason that companies choose to work with Barclays is our extensive presence in Africa, with a direct presence in 10 countries and a majority holding in ABSA in South Africa - few international banks are able to provide this coverage. While clearly there will be competition between core banks, such as in Western Europe, banks’ services can often be complementary.

You mentioned that in some cases, of course, there will be a variety of banks offering appropriate services in a region. What factors do you think are important for a company choosing a bank provider?

Geographic coverage and provision of the products that a company needs are clearly amongst the initial criteria, but there are other important issues too. For example, we believe that a bank’s ability to deliver both investment and corporate banking capabilities is important, recognising the breadth and interrelationship between its clients’ financing and advisory needs.  Secondly, the quality and accessibility of a bank’s relationship and service people is key, not only during the early, implementation stages of a mandate, but on an ongoing basis. In particular, a client needs to be able to access the right individuals who know the business quickly, in order that any issues can be resolved efficiently and opportunities responded to. Furthermore, particularly when banking services are provided to a client in more than one location, this needs to be based on a clear understanding of a client’s decision-making ‘tree’. Execution, however, is necessarily in the hands of the bank’s operations on the ground, which should be staffed by people who have a deep understanding of local practice, legal framework, regulations etc. At Barclays, we address this by having a ‘global’ approach to co-ordination of services, with defined ‘local’ delivery. Global Relationship Directors from Barclays Corporate and/or Barclays Capital work closely with the client to understand their changing needs and present appropriate solutions, drawing upon expertise from various parts of the bank. For example, if a client has a subsidiary in United Arab Emirates, that company may well need a local product in local currency that specifically addresses the company’s working capital requirements. To provide a cohesive service, the Global Relationship Director provides a ‘gateway’ role that facilitates the coverage of opportunities wherever these may occur – but critically avoids becoming a ‘bottleneck.’ Without this disciplined approach, it can be more difficult for  a client to keep track of and manage the full range of business with a bank.[[[PAGE]]]

In an environment where corporate clients are seeking “best in class” products and services, how can these be tied together in a cohesive global strategy?

As companies recognise that a ‘one size fits all’ approach with a single banking partner is not prudent – or even feasible, they are selecting services from a variety of banks. However in the sphere of cash management clients still typically want the benefit of wide visibility and control over cash and related information reporting. For truly global multinationals, this activity will be run from regional treasury centres, for example in London for Europe, in Singapore for Asia, etc.  In many cases,  these treasury centres appoint an overlay bank to consolidate data in a timely and consistent way. Alternatively, treasuries will elect to use a bank-independent connectivity/ communication tool such as SWIFTNet. Barclays Corporate continues to invest in cash management innovation.

Increasingly, we are also seeing clients prioritising trade, working with banks that have the credit standing, the systems and the reach to ‘partner’ with them as they grow their own international trade-related business. This is an area in which Barclays is already well-positioned, with a developed trade platform and the ability to issue instruments in relevant jurisdictions, for example in Africa, India etc. This ‘trade’ product set incorporates sophisticated, bespoke applications: for example, supply chain financing programmes for multinational companies seeking to increase the resilience of their supply chain, by supporting suppliers, whilst still protecting their working capital position. At Barclays, we endeavour to take an ‘advisory’ approach to both trade and cash management, exploring ways to interlink channels effectively so that we address the ‘full picture’ of the client’s need to move/invest cash and support trade flows.