Barclays bank reports surge in emerging-markets trading

Barclays saw a surge in emerging-markets trading last quarter, with revenue climbing to about £500 million (€594 million) amid volatility spurred by Russia’s invasion in Ukraine.

The increase came as the bank’s traders seized on turbulent currency markets and big moves in credit-default swaps, according to people familiar with the performance, who asked not to be identified because the firm had yet to report first-quarter results. The bank is due to post its latest earnings on April 28th.

The surge indicates Barclays traders may have navigated a quarter that saw banks’ trading desks benefiting from higher activity but also facing potential blow-ups amid fast-moving markets. The London-based lender made £1.2 billion in revenue from overall fixed-income, currency and commodities trading in the first three months of 2021, and industry analysts say emerging markets typically account for less than a quarter of FICC revenue at major banks.

Emerging markets currencies and rates trading generated about £400 million last quarter, with roughly half coming from bets on currencies from central and eastern Europe, the Middle East and Africa, the people said. Barclays’ emerging markets credit desk made about £100 million, much of it on the surge in Russian and Ukrainian credit default swaps, they said.

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A spokesperson for Barclays declined to comment.

Deal-making activity

The performance should help Barclays offset a slide in deal-making activity and keep pace with Wall Street rivals that have managed to maintain or even grow revenues from FICC trading in the first quarter.

Markets were roiled during the period by the Ukraine war as well as global efforts to temper inflation by hiking interest rates. The cost of insuring Russia’s debt against default for five years rose 1,100 per cent in the quarter, with prices whipsawing daily, according to data compiled by Bloomberg.

Russia breached the terms of two bonds last month, which could trigger as much as $40 billion (€37.3 billion) in credit-default swaps if the sanctioned country doesn’t pay bondholders in dollars before the debt’s grace period ends on May 4th.

The Russian ruble lost more than 10 per cent against the dollar in the first quarter, while the Ukrainian hryvnia declined about 7 per cent, according to data compiled by Bloomberg.

“Volatility is a good thing, but you must be careful what you wish for,” Barclays chief executive CS Venkatakrishnan said in March, when he signalled that large-scale deals and initial public offerings had slowed following the Ukrainian invasion. – Bloomberg