Barclays (LON:BARC) Plc has reported signs of a resurgence in mergers and acquisitions alongside a thawing of equity capital markets, according to Chief Executive Officer C.S. Venkatakrishnan. This positive shift comes after a prolonged slump that negatively impacted investment-banking revenue across the industry.
Venkatakrishnan, speaking at a conference hosted by the London-based firm on Tuesday, highlighted that banks are increasingly willing to lend on terms more aligned with investors' needs. He noted that investors are currently flush with cash and asset prices have fallen to more acceptable levels. "There's activity under the surface," Venkatakrishnan said, suggesting an impending shift in market dynamics.
Despite these promising signs, Barclays' investment banking revenue declined 15% to £472 million ($589 million) in the second quarter due to a 45% slump in advisory fees. This downturn aligns with industry trends, leading to job cuts as a response to the prolonged lack of deals and capital markets activity.
However, the upcoming listings of Arm Holdings Ltd. and Instacart Inc. indicate a potential thaw in the market for initial public offerings (IPOs), which had been stagnant for over a year. The reception of these listings could pave the way for other companies that have been forced to remain private due to market conditions.
Under Venkatakrishnan's leadership, Barclays has undertaken a comprehensive review of its operations aiming to boost its stock. The bank presently has a price-to-book ratio of about 44%, suggesting it's valued less than what investors would expect if the firm liquidated its assets.
On Tuesday, Barclays shares rose 2.5% to close at £153.58, reducing this year's decline to 3.1%. Venkatakrishnan and Finance Director Anna Cross are reportedly working on revising some profitability targets, including those linked to the bank's return on tangible equity and shareholder returns. "We've been very clear that some of our financial targets and our guidance needs a bit of revision," Venkatakrishnan said.
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