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The Financial Industry Of Barclays Bank

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Introduction Banking success is all about sustained profitability through the application of robust scientific investments and gap management strategies. It is imperative for banks to keep a close watch on the interest rate cycle: if rates are rising they have to ensure that their lending rates rise alongside or before the borrowing rate and vice versa. The premier position that Barclays enjoyed in the financial industry for over 3 centuries is a validation of the fact that it was built on the strong principles of finance. However, the last couple of decades have seen an erosion in its reputation due to the breaching of those very principles. Barclays Bank is one of the biggest British multi-national banks headquartered in London with a …show more content…

Barclays of the future, according to their chief executive Antony Jenkins, will be a focused international bank with four core businesses, namely Personal and Corporate, Barclaycard, Africa, and Investment Bank. Each core business will be balanced and strive to win in its field of operation. This paper will investigate several theoretical financial principles and their applications by Barclays. Special emphasis will be on Investment Banking and Wealth management services of the bank. These are the divisions in Barclays that handle markets and are involved in the trading of stocks, bonds, commodities, forex, interest rates and market indexes. Trading in derivatives is commonly employed by Barclays to hedge risks, but we will see that the fund managers in the last decades exposed the bank to risks by indulging in huge speculative investments. Let us investigate a few financial principles now. Capital Assets Pricing Model (CAPM) CAPM is a highly acclaimed theory of risk and return for securities in a competitive capital market. The path breaking theory won Sharpe and Markowitz the Nobel Memorial Prize in Economics in 1990. CAPM establishes the beta coefficient as a measure of the systematic risk of an asset. Systematic risk is also known as market risk. This risk cannot be eliminated nor is it controllable. Unsystematic risks include the risk that influences a single company or a small group of companies, and it is controllable and can be mitigated through

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