Darcy Lai departs Barclays Capital

Barclays' head of Asia-Pacific investment banking leaves as the firm uses the Lehman expertise it has acquired to broaden its presence beyond debt.

Barclays Capital's head of Asia-Pacific investment banking, Darcy Lai, has left the firm and his replacement has not yet been announced.

Lai's departure is part of the "Lehmanisation" of Barclays, says one banker, referring to the new investment banking structure announced by the bank in December 2008, soon after it struck a deal to buy Lehman Brothers' North America franchise in September. The structure sees former Lehman bankers heading all 15 sector verticals at Barclays Capital. Paul Parker, who was appointed chairman and head of global mergers and acquisitions at Barclays Capital, is also a Lehman banker.

But others suggest Lai's departure is simply a sign of the times. Lai joined Barclays in June 2001. He was previously head of South Asia debt capital markets at Deutsche Bank, but resigned following a restructuring of DCM at the German bank. Lai took around a dozen colleagues from Deutsche's DCM department with him to Barclays. The move was intended to launch Barclays' debt business in the region and came soon after Barclays announced that it was appointing its global head of DCM, Robert Morrice, as chairman and CEO for Asia. And Barclays has built a presence in debt league tables, especially by doing offbeat deals.

But DCM activity in the region has slowed down and, indeed, debt syndicate desks across firms have been trimmed amid expectations that it is to be a while before it picks up again. Barclays Capital has been eager to broaden its presence beyond debt for some time now. In May 2008 it once again adopted the strategy of bringing on board a team from a rival firm, this time to kickstart its M&A advisory business, by poaching five senior bankers from ABN AMRO to build its corporate finance franchise across Europe, the Middle East and Asia. The five senior hires brought with them an ABN AMRO team comprising a few dozen people.

The British firm now aims to move into a leadership position in equity capital markets and M&A deals and to use the opportunity created by the change in direction at some of its competitors to entrench itself in these areas. With his roots firmly in DCM, Lai may not have been the right person for this strategy.

A Barclays spokesperson confirmed Lai's departure, but said the bank had no comment and that no replacement has been announced.

Some sources find it surprising that Barclays Capital has not already identified Lai's replacement, as his departure seems part of a well-planned strategy. But others comment that, at the current juncture, Barclays Capital should have no dearth of talent to fill this role and not announcing a successor could be a good way of attracting new talent. Barclays Capital could decide to parachute someone in from a Western market where activity has slowed.

But equally, Barclays, which has not yet turned to the British government for a bailout, is one of the few European banks that has the ability to continue to pay cash bonuses. This could help the firm to entice a veteran Asia hand from one of the larger investment banking franchises, who sees the opportunity to work at a bank well-placed to strengthen its investment banking franchise as an interesting opportunity.

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