Three challenges facing Barclays’ new head of wealth

By:
Helen Avery
Published on:

Akshaya Bhargava, Barclays' new CEO for wealth and investment management, has his work cut out.

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Barclays announced on Monday that Akshaya Bhargava will become the new head of the firm’s wealth and investment management business.

A former veteran with Citi, Bhargava also served as CEO for Butterfield Fulcrum, a private bank, was founding CEO of Infosys BPO and latterly InfraHedge, which provides operational and risk infrastructure, and was acquired by State Street in 2013.

Barclays’ commitment to the wealth management business has been brought into question in recent years, during a key period of transition for the industry as a whole. Bhargava’s first job will be to convince market participants and potential clients the bank is steadfast in its commitment and has a plan for growth.

Akshaya Bhargava-large
Akshaya Bhargava

The position of CEO for the role has been in flux for a couple of years. Tom Kalaris became CEO of wealth in 2005, but then took on a dual role of executive chairman of the Americas in 2012, which indicated a pull-back in the wealth side of the business. 

After his departure, Peter Horrell took over in 2013 before stepping down in June. Horrell bore witness to Barclays’ strategic overhaul, which culminated in announcing that the wealth management business would be rolled into the personal and corporate banking business.

Horrell’s leaving seems to question his conviction in the firm’s new strategy, and Bhargava will have to prove he forms a good team with Ashok Vaswani, who heads up personal and corporate banking.

Bhargava will also need to focus on the UK. Last September, the bank announced it was pulling out of 130 countries by 2016 – despite in 2011 aggressively pushing itself as a global wealth manager that hoped to compete with the likes of UBS, Credit Suisse, JPMorgan and Citi Private Bank.

UK focus

That’s a good thing – the UK is where Barclays should be focusing, as it is a natural market and one where it can leverage its retail presence – but it is failing to gain traction. Much smaller rivals, such as independent C Hoare & Co, have seen many Barclays clients head their way.

The highly fractured UK wealth market offers a prime opportunity for large firms such as Barclays. The bank has been touting its investments in technology and if it succeeds in improving the customer experience and providing innovative product solutions, then the next generation of wealthy might consider Barclays a solid entrepreneurial partner.

On the other hand, the retail distribution review has put longstanding relationships on the block and Barclays could continue to lose clients, while its reputation among retail customers has been tarnished in recent years amid a litany of scandals.

Bhargava will need to find a way of differentiating
Barclays’ offering from the crowd

Bhargava will have to exert his influence to boost the bank’s reputation, by emphasizing its socially useful role in retail and corporate banking.

Barclays also would be wise to re-enter the investment-management fray. BlackRock was a jewel in Barclays’ crown that it had to let go and now it needs to build a convincing argument it has a role as an investment manager and not just a personal bank.

It talks a good talk in asset allocation for clients, with its experience and investments in behavioural strategies and research, but can Barclays be a top-tier investment manager beyond ETFs and funds?

The hope is Bhargava can bring something fresh to the table from his experience with InfraHedge and State Street.

Investment management is now key for wealthy clients who want to see results for the fees they pay. UBS, Credit Suisse, JPMorgan and Goldman Sachs have asset-management businesses that Barclays will struggle to compete with.

Bhargava will need to find a way of differentiating Barclays’ offering from the crowd.