Barclays Capital aims to grow U.S. debt business

By Quentin Webb

LONDON (Reuters) - Barclays Capital, a leader in European debt capital markets (DCM), plans to improve its comparatively lowly standing in the United States, the bank's head of rates said on Wednesday.

Barclays Capital, the investment banking arm of Britain's Barclays Plc (BARC.L: Quote, Profile, Research, Stock Buzz), is Europe's top DCM bookrunner this year, advising on $367 billion of deals, according to Dealogic data.

But it ranks just 13th in the United States, where U.S. powerhouses such as JP Morgan (JPM.N: Quote, Profile, Research, Stock Buzz) and Lehman Brothers (LEH.N: Quote, Profile, Research, Stock Buzz) rule the roost.

"The U.S. is clearly an area where we're looking to grow our debt capital markets franchise," Barclays Capital Co-President Jerry del Missier told the Reuters Investment Banking Summit in London.

"We would expect to see over the next few years more of the growth of our franchise coming from the U.S., because of the focus that we've had on building that business," he said.

Del Missier said Barclays Capital had got a boost from "a discernible shift in the capital markets toward the universal banking model" and away from more narrowly focused investment bank and that he expected that trend to continue.

In Europe where competition between a panoply of banks has squeezed fees, some houses are less keen on high-volume, low-margin debt business, such as senior bonds for financial borrowers. But del Missier insisted that was vital.

"At the very heart of our model is a belief that you need to do the simple stuff really well," del Missier said.

"This is the key to sustainability in the capital markets, in foreign exchange, in government bonds," he said. "You're dealing with the client on a daily basis. You know what they're thinking, the issues that are important to them."

"I think it's very hard for someone to saunter in and say, 'All that boring stuff, that low-margin stuff, that is really important to you, but frankly I get nothing out of it. I don't want to do it; I just want to see your most interesting, value-added product.' I don't think that's a story that washes with clients."

Del Missier forecast rapid growth would continue in the $26 trillion credit derivatives market. "Credit derivatives is still very young. There's still tremendous opportunity for growth and continued evolution of product," he said.