|Shares Out. (in M):||12,600||P/E||13.2x||10.5x|
|Market Cap (in $M):||65||P/FCF||13.2x||10.5x|
|Net Debt (in $M):||0||EBIT||0||0|
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Barclays PLC (heretofore Barclays) is a universal bank whose primary business sectors include: a domestic UK retail and commercial banking franchise, a global investment bank, a Continental European banking franchise, a growing emerging market bank footprint (with concentrated exposure to South Africa), and a US & UK credit card lending portfolio. The closest comps in terms of business mix and footprint would be the universal banks in the US such as Bank of America, JP Morgan, and Citigroup, although Barclays' international retail & commercial banking presence is most similar to C's. Barclays also holds a 19.9% economic interest in BlackRock after selling its Barclays Global Investors (BGI) asset management arm to raise capital in early June.
Management: Recent Capital Allocation Decisions were savvy
John Varley is the CEO of Barclays Group. He has served as the CEO since 2004 and has been with the firm in various roles since 1982. Bob Diamond is the President of Barclays Group and is the Head of Corporate and Investment Banking (CIB) and Wealth Management. Diamond has been with Barclays since 1996.
Management is savvy as evidenced by a few of their recent capital allocation decisions. Barclays was able to purchase Lehman Brothers' North American trading and investment banking operations for $1.75b ($250m in cash legacy assets and liabilities; $1.5b for the headquarters). The acquisition was transformational for BarCap (investment bank) because it strengthened Barclays fixed income offering (particularly in mortgages and credit) while also providing an equities and M&A business, two areas in which BarCap previously had no presence. Furthermore, Barclays was able to avoid a bailout/ownership by the UK government through two different capital actions. First the bank was able to sell shares to two Middle East sovereign wealth managers, the Qatar Investment Authority and to a lesser extent the Abu Dhabi Investment Authority (holders of warrants). While this capital raise was dilutive to existing shareholders it avoided government ownership, unlike UK competitors Lloyds or Royal Bank of Scotland. Secondly, Barclays was able to monetize its BGI asset management business. The sale of the business generated generated a net gain of $9.7b (£6.2b) and added 185bps of Core Tier 1 capital, while also providing Barclays with an economic stake in the future upside of the business (19.9% holding of Blackrock, the acquirer).
Earnings Sensitivity/Normalized Earnings
Valuation & Risk/Reward:
Overhangs: why is the stock cheap vs. peers?
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