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Barclays aims for annual growth of 40 per cent Back  
Since establishing an Irish operation over 25 years ago, Barclays has continued to grow its presence and the range of services it offers. Last year their business bank moved away from its branch status to become a fully licensed bank, and announced ambitious growth targets of 40 per cent per annum. Ahead of the bank’s move to new offices in Park Place, Tom McAleese speaks to Fiona Reddan about the bank’s plans for growth, its expansion into new product areas, and dealing with the increasingly competitive Irish corporate banking market-place.
Barclays is one of the largest integrated financial services companies in the world, with over 118,000 employees spread across 60 countries, and 1542 international branches. The bank currently generates roughly 50 per cent of its income from its overseas operations, and chief executive John Varley has expressed his desire to make this a sustainable split. The man charged with delivering that growth from an Irish perspective is Tom McAleese, who joined the bank as managing director in 2004.

A native of Co. Clare, McAleese has had a varied career, with experience in many different sectors.
His first job was as a graduate trainee in reinsurance, with the Swiss Re Group in London. He moved back to Dublin after a year to train as a chartered accountant with KPMG, and to advise clients on capital investment projects and investment reviews. From this position he moved into aviation finance with the GPA Group, where as a structured finance executive he was involved in structuring and managing big-ticket cross-border asset finance transactions.
In 1996, he joined ABN AMRO and held various business development positions with the Dutch bank over an eight year period, with his last position being country representative for Ireland, When he left ABN AMRO in 2003 to join Barclays, he took several key staff members with him, including Ciaran Kane, who now heads up Barclays’ treasury division in Dublin

Barclays in Ireland
Barclays’ main presence is in the corporate and investment banking market in Ireland, with operations in Dublin and Belfast and McAleese acts as the group’s senior representative in Ireland.
Barclays has had an Irish presence for over 25 years, although it has never received the widespread recognition a retail branch network would give it in Ireland, it is firmly established as a key player in the corporate and investment banking sector.

Moreover, it also has a servicing centre for its Barclaycard business product in Sandyford, which employs 250 people, and two internationally focused insurance operations, Barclays Insurance (Dublin) Limited and Barclays Assurance (Dublin) Limited. These operations employ almost 100 people, and provide various non-life and life covers to Barclays’ customers throughout the EU. It also has 10 branches of the Woolwich in Northern Ireland, and Barclays Global Investors has over €40 billion listed on the Irish Stock Exchange.

The bank
In mid-2005, Barclays rebranded and refocused its Irish business banking and established a full Irish licensed bank called Barclays Bank Ireland PLC. At the time it announced its new focus was to pursue an accelerated growth strategy focused on several high growth areas including structured finance, a new investment banking offering and an industry sector focus to it corporate banking business.

Previously, Barclays in Ireland traded as a branch of its UK parent, but as of July 1st, it is now a licensed bank, with a balance sheet of circa ?2.5 billion. The decision was taken, says McAleese, as the bank wanted to show more commitment to the Irish market, and to develop more activities out of Ireland, including a syndication business. The bank currently employs 65 people in its St.Stephen’s Green location in Dublin, and McAleese sees this growing to around 80/90 once the firm moves into its new office in the Park Place development on Hatch Street.

McAleese says, ‘The key is to have experienced bankers on the ground that know the market and cultivate the relationships locally rather than having ‘suitcase bankers’ from London. We may have a UK parent but we are an Irish bank as demonstrated by a strong Irish management team and two senior non executive directors, Donal Roche, chairman and Chris Cullen.’

Previously, the bank focused on two areas. Firstly, subsidiaries of multinationals, to which Barclays offered operational bank management/treasury services, and secondly, the Irish corporate sector, where they provided strategic funding, debt capital markets and structured finance services to the top 20 corporates and large government departments.

According to McAleese, the bank now focuses on three key areas : corporate banking (with a sectoral approach), structured finance, and investment banking.

The corporate banking sectors it is focusing on are the following areas: retail &wholesale; manufacturing; hospitality&leisure; telecommuncations, media & technology; financial services; business services & logistics; and government/local authorities. McAleese states that, ‘we have dedicated bankers who have sector expertise and they can now speak the language of the customers’.

The structured finance division looks at three areas – 1) property, 2) infrastructural finance such as Public Private Partnership deals and financing in the waste/wind farm arena, and 3) leveraged financing. So far this area has recorded strong growth for Barclays Irish operation, and the bank financed the Cork School of Music deal last year, and is currently involved in the financing of the new National Conference Centre. Barclays also provides financing for renewable energy firms Airtricity and SWS.

As part of its investment and banking offering the Bank is moving into offering capital advisory services, whereby Barclays analyses the balance sheet of a corporate, and recommends the firm’s optimal weighted average cost of capital (WACC), as well as benchmarking the firm against its peers. Barclays currently has two investment bankers dedicated to this service, and McAleese says it is about, ‘trying to bring in an innovative, holistic approach’ to the company’s financial structure.

Plans for growth
McAleese is looking at growth of 40 per cent per annum over the next three years, achieved both via incremental growth of existing clients and by offering more and better products to existing and new clients. He is looking to grow the bank’s asset base from the current level of €2.5 billion, to around €8 billion by 2009, through use of it own balance sheet or through the capital markets.

From a product perspective, private placements are a key growth area for the bank, and Barclays was awarded ‘Deal of the Year: Best Corporate Issuance’ by FINANCE magazine for its work on the Quinn Group €300 million private placement and re-financing transaction. McAleese says that this method of funding remains very popular with corporates as they don’t need a rating to raise money in this way, and the cost of such transactions are priced close to bank funding but they have a longer tenor.

Other product innovation includes the offering of securitisation structures to customers. Securitisation is also an area that Barclays sees itself doing more and more business, and so far this year it has transacted two large-ticket property securitisation deals, which were valued in the region of €200-250 million each. In addition, the bank has also transacted a large mortgage backed securitisation for Start Mortgages.

In April of this year, the bank expanded its Irish service offering when it established a wealth management division under Pat McCormack. McCormack had previously worked with Barclays Capital on the derivatives side, and this new venture will target high net worth individuals and those running family businesses. McAleese says it will look to sell structured equity and debt products, rather than the property syndicate transactions offered by other banks in the Irish market.

A competitive market
With the entry of more banks such as HSBC into the corporate banking market in Ireland, competition is heating up, with banks having to continuously update their product offering and services to retain and win new customers. McAleese sees Barclays’ ‘usp’ or unique selling point as being its links with a large global bank, and the strength in depth and expertise that the Irish operation can then call on.

Moreover, McAleese does not see the bank as purely competitive with the indigenous banks, but rather can be complimentary in some respects, as they work with them on deals that need to be syndicated from time to time.
Overall McAleese says, ‘Barclays Bank Ireland is very much committed to the Irish market and our Irish strategy ties in nicely with Barclays’ overall global expansion plans – you can expect to see more from us.’

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