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Saturday, 20th April 2024 |
| Barclays focussed approach targets Irish corporates |
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| Barclays wants to grow its share of the Irish corporate banking market, and sees itself as a niche provider of cross-border banking services. Paul Shovlin, managing director of Barclays Ireland talks to Roisin Hogge. |
Paul Shovlin is the man charged with the task of deepening Barclays’ footprint in Ireland. From his office overlooking St Stephen’s Green in Dublin, he tracks the four Barclays businesses in Ireland. He runs the corporate banking arm in both Dublin and Belfast and is also closely involved with IFSC companies Barclays Assurance, Barclays Insurance, Barclays Global Investors Ireland and Barclays International Financial Services as well as Barclaycard’s international customer centre in Dublin.
Indeed the Barclays’ footprint is one that has already deepened substantially over the last six years - employee numbers in Ireland have risen from just 55 in 1995 to over 300 (both direct and indirect) in 2001.
According to Shovlin this growth is thanks in some part to the successful growth of the corporate bank in Ireland. ‘The strength and satisfaction with the Irish corporate banking operation at Group level helped to facilitate decisions to expand and open the other businesses here in Ireland’ he says.
Despite such activity the profile of Barclays in Ireland is relatively low. But Shovlin is pragmatic: ‘Basically we’re in a couple of niches and the main local niche is larger Irish corporates that are either investing or trading across international borders. We have not been interested in the purely domestic play and we’re not involved in the SME market at all, so therefore it may seem that we have been quiet.
Corporate banking
Looking at the breakdown of Barclays Dublin, Shovlin estimates that about 40 per cent of the business is with large Irish corporates, and the remaining 60 is from inward investment - large international companies doing business in and out of Ireland. ‘The big part of our business here is British, US and other companies coming into and doing business in Ireland. The majority of that comes from the UK. We have a 25 per cent share of the corporate banking market in the UK, so we’re leveraging on that market share in the Irish market.’
He says that Barclays is a niche player in the domestic Irish market and gives the example of providing investment banking products, and electronic banking services as a specialist area. We are also now a significant provider, since launch in early 2000, of the Barclays Sharesave SAYE product to large Irish Corporates. ‘We play to where we feel we have a competitive advantage. We don’t see ourselves as a commodity supplier of credit but rather in areas where we can add real value. For example the financing of Public Sector/Private Sector Partnership is an area that is of great interest to us’
Shovlin says he expects the domestic portion of the business to increase over the coming years. Presumably this would be at the risk of a leveling off in international companies’ doing business in Ireland.
But in trying to grow the domestic side of Barclays’ business - are there not an unlimited amount of domestic corporates to do business with? ‘We look at in terms of what is the available business potential from a particular company. If a company doesn’t have that potential then there is no mutual attraction to do business. For example a company could be very large but could be very domestically orientated or may have just a tiny sliver of exports to Britain.’
Shovlin identifies the operational set-up in Dublin as one of the company’s competitive advantages. ‘We have a one-stop-shop here in terms of our relationship management approach to our corporate customers. And then we can deliver the services - the treasury services, the credit services, the trade finance and then we can actually outsource the investment banking products from London. In recent years we have been a very active arranger and participant in the Loan Syndications market. A recent example is the successful E375 million EBS syndicate, which we jointly arranged. We see ourselves as the gateway to all of the Barclays’ products for our corporate customers - not simply as a domestic banking unit.’
Barclays Ireland would appear to have no designs on the Irish retail market at all. This is stark contrast to the situation in the UK, where the bank is taking part in the consolidation of the banking industry with the recent deal to take over the Woolwich. And the company recently announced plans to outsource all of its insurance, long term savings and life products to Legal & General. However as these are UK retail products they won’t be available in Ireland.
European strategy
Barclays strategy for Europe is to concentrate on the cross-border business. ‘Cross border business is the strategy for Europe and that is the strategy for Ireland too. We (the Irish office) are probably the most successful example (within Barclays) of the cross-border strategy in action outside of Britain.’ Other European offices have used Dublin as a model.
‘It is built upon the fact that we’ve positioned ourselves to deal with our customers in a seamless way across borders - because we are not subsidiaries we are branches. In the same way as the Irish banks have branches around Dublin, we see UK offices Frankfurt, Dublin and Paris as our fellow branches, rather than country offices’
A targeted approach
Shovlin says the bank has adopted a focussed way of marketing itself, namely addressing only those its sees as potential customers. Given the strength of the Barclays image ‘We don’t have a brand recognition issue and we’re in a segment of the market which suggests there is no need to be shouting your business from the rooftops. It is a focussed approach rather than an “all things to all men” approach. ‘The people who are using the products know exactly what we are doing and we focus on them rather than informing the rest of the world.’
Treasury
‘In 1994/1995 we were one of the biggest proprietary traders in Ireland, trading, buying and selling huge chunks of currency like $50 million at a time - we were one of the largest. We stopped that in 1995 and we reverted to corporate treasury sales. Since that time we’ve built up a significant and successful presence in corporate treasury sales within vanilla products and within more sophisticated products. We manufacture the vanilla products locally and we take the sophisticated products, like derivatives, from Barclays Capital.’ And the bank has focussed on developing the treasury business over the last five years, and it now accounts for some 30 per cent of the banks business.
Addressing the changes that have come into banking industry in Ireland over recent years Shovlin identifies compliance as paramount. ‘Compliance has dashed up the scale in terms of importance along with the need to have detailed ‘know your customer’ information. On the DIRT issue we look forward to a more defined operating relationship with the Revenue Commissioners on DIRT administration, and that is something that will happen.’
Basel Capital Accord
‘We feel it is a logical follow on in defining the risks that financial institutions take and measuring them in a much more sharp way than heretofore. The existing bank capital regulatory regime is more blunt than it needs to be. We have been at the vanguard of producing our own risk/capital measurements. For example, we have risk adjusted pricing which we price loans on the basis of the risk measurements we apply. We see the pronouncement on the Basel Accord as more convergence between economic capital that it takes to run a business like ours and the regulatory capital.’ |
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| Article appeared in the February 2001 issue.
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