In the City
Barclays’ hot potato
PRO-PALESTINIAN activists last week disrupted the Barclays annual shareholders meeting for a second year, with protesters accusing the bank of “bankrolling genocide”. Highlighted was Barclays’ role as a primary dealer in Israeli government bonds (vital to funding state spending), including on the wars in Gaza and Lebanon, together with illegal West Bank settlements. Last year also saw red paint, graffiti and window-smashing at bank branches.
Israel is a tiny part of Barclays’ global operations. Last year the bank lost money there, which may help explain why it was considering dropping out of the bond auctions to reduce the protests and bad PR. However, when this was picked up by the Financial Times last August, there was an immediate denial and U-turn. Barclays continued to participate in subsequent government bond auctions.
Israel borrowed a record $75.9bn last year. Bloomberg reported that 81 percent was raised on the local bond market. Israel also raises significant amounts from the sale of Israel bonds, particularly to American investors, individuals plus municipal and state authorities, as well as foreign currency bonds.
The Barclays 2024 annual country snapshot of its global operations ranked Israel at 25 out of 38 countries by revenue. Last year that revenue, described as mainly from “investment banking activities” (bond market earnings plus lending to Israeli companies and trading in their shares for clients – another target for protesters), slumped from £20m to £13m, resulting in a £2m loss compared with a £5m pre-tax profit in 2023. In 2022, revenue of £25m produced a £6m profit; in 2021 those figures were £23m and £5m; in 2020, £21m and £7m. Last year Barclays had group revenues of £26.8bn and pre-tax profits of £8.1bn.
Bond characters
Barclays inherited the Israeli operations when it acquired parts of Lehman Brothers following the Wall Street bank’s collapse in 2008. Barclays is one of seven foreign banks that act as primary dealers, raising funds by underwriting and purchasing government bonds at auctions and selling to clients. They are also active in the local secondary bond market.