What does the acquisition of Lehman Brothers' North American business mean for your Asia-Pacific business?
For us, investment banking is all about content. Clients won't even let you in the door unless you have good content to talk about. You get one courtesy call. When you have a US investment banking business you just have so much more content to deliver to clients.
If you look at the model we had prior to the acquisition of Lehman Brothers' North America business, it was very much focused on debt capital markets and risk management; we weren't providing broad advisory services. And you can't provide that service unless you have a fully-functioning US capital markets business. We now do.
As a result of the Lehman acquisition, we have good content to talk about. Take sector analysis. There isn't very much value to the analysts' comments in Asia alone, unless you have others in Europe and the US who can complete the picture. People don't want to hear views just about one region, they want to hear about how it fits into a global platform.
We've been building out Europe, and we've been building out Asia. In the US, we now have a top five position in every segment of the capital markets business. We knew that was impossible to build up organically so we are obviously quite happy to have that now. And it has had knock-on effects -- we've been adding more and more bankers out here. The challenge is people want to see results quickly, and with M&A, with IPOs, it takes time to build a pipeline. But we're pretty happy with the progress we've made so far.
How has the integration of the two businesses gone?
I think the businesses are very complimentary. We looked at Lehman for six months trying to understand it after Bear Stearns went down. It wasn't that we knew what would happen, it was that we wanted to be ready and know what would and wouldn't work. We knew from the outset that it was likely to be complimentary, but what we found was that, like Barcap, it was very client focused overall, with a lot of people who had been there for a very long time, so the culture was quite strong. It was a culture that hung around, that wasn't full of people who hopped around from one job to another, it was very stable. And that appealed to us as well.
Combining that US business with the expertise of Barclays Capital has worked. The global head of investment banking is from Lehman Brothers. The global head of equities is from Lehman Brothers. They've joined Barclays Capital's executive committee. They are now two senior guys in the top eight or 10 people in the firm -- so that has helped brings things together and we feel pretty good about that.
What do you need to see happen for you to say, 'it has been a successful year'?
We've completed a significant amount of the hiring at the senior level now. The market has turned around very quickly, but contrary to some of the press coverage we have received, we've continued to be disciplined in our approach to hiring and compensation.
We are very focused on quality over quantity, as well, because this is going to be a long build for us. This is not something that can be built in 12 months. We're going to put the platform in and then we are going to evolve the business.
So getting the sector and coverage bankers hired; getting the equity platform in Japan fully operational, which is on schedule for year end, and seeing that we are on schedule with our timetable for the non-Japan Asia hub to be established in Hong Kong, are all good steps. It's just an enormous task to roll out a global equity platform but we are on track.
How has the changing landscape within the investment banking arena in Asia impacted your business?
There is still a lot of competition. You saw how quickly the market has turned around.
Do you think this is good?
Well there are two things. I think it's good for the psychology of the economies, which are so focused on the stock markets out here. But is it good for the industry? I'm not so sure. You suddenly have people hiring very aggressively -- perhaps too quickly -- right now. We all know in Asia the talent pool is quite limited so that puts some strain on the system. Our headcount in the region this year is up 5% since the beginning of the year, the plan is to take it up another 2% to 3% by the end of the year. Where we do benefit, is the fact that we were hiring in places like Japan when others were scaling back. And we're very comfortable with our plan in Japan.
In terms of the competition, are there any surprises?
When we are out trying to win business it's the same competitors we have seen over the years. We've started to see Standard Chartered get a bit more aggressive, and HSBC, as well. But the rest -- it's pretty much the same players.