BCS Barclays PLC

By Max Colchester 

Barclays PLC's new corporate-and-investment-banking chief, Tim Throsby, recently toured his unit spreading a message that staff haven't heard for years: Don't be afraid to take more risk.

Since his arrival in January, Mr. Throsby has told staff at meetings to reawaken their "commercial instincts" and use more of the bank's risk appetite, these people say.

On Tuesday, he promoted Art Mbanefo, a lieutenant who will be charged with helping manage Barclays International's balance sheet, according to a memo sent to staff. Mr. Mbanefo's job is to squeeze capital out of the unit that can be redeployed to juice up returns. He will work across Barclays' biggest revenue generator, encompassing the lender's investment bank, big corporate clients and its U.S. credit-card business.

The move to reinvigorate the unit marks a turning point for the bank. European lenders have spent years shrinking their investment-banking businesses amid increased regulatory pressure to limit risk-taking. In 2008, Barclays acquired a chunk of the old Lehman Brothers franchise in a bid to build a global investment bank. But after a wave of scandals, management put the emphasis back on the U.K. lender's retail franchise.

Now, under Barclays Chief Executive Jes Staley the pendulum is swinging back. While rivals Deutsche Bank AG and Credit Suisse Group AG continue to reshape their investment-banking franchises, Barclays says it is approaching the end of that process. Last year it largely pulled out of Asia and refocused on the U.S. and U.K. Like other diversified banks, Barclays' share price has risen nearly a third over the last 12 months thanks to the prospect of rising rates in the U.S. Investment-bank executives hope they can ride a wave of market volatility to generate more returns.

Some bankers, scarred by the years of cuts and restructuring, have held back from taking decisions that are still within the bank's risk parameters. Mr. Throsby wants that mentality to change, according to people familiar with the matter.

Nevertheless, investors continue to question whether Barclays' investment bank can generate solid returns. The unit had a return on equity -- a key measure of profitability -- of 6% in 2016. Investors want it to generate double-digit return on equity. Key to that will be Mr. Throsby's ability to do more business without asking his boss for extra capital.

Unlike at its major U.S. rivals, capital remains tight at Barclays. The bank slashed dividends to pay for a cleanup of its balance sheet, which is expected to be completed by the end of June this year.

Mr. Mbanefo's job will be to ensure Barclays International's balance sheet is run efficiently. This should free up capital that can then be plowed back into the franchise to increase returns.

So far potential growth areas that have been identified by Mr. Throsby include the bank's U.S. credit-card business, these people say. The executive also is planning to review of its U.K. corporate business to focus on clients that generate what the bank considers appropriate returns, these people say. The investment bank hopes to grow returns by increasing business cross-selling to existing clients.

Write to Max Colchester at max.colchester@wsj.com

(END) Dow Jones Newswires

March 08, 2017 05:44 ET (10:44 GMT)

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