BARCLAYS PLC
• Global Financial Services Provider
– Retail Banking / Credit cards
– Corporate and Investment Banking
– Wealth Management
• Nine Segments:
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UK Retail Banking & Barclaycard
Western Europe Retail Banking
Barclays Africa (Absa)
Barclays Capital
Barclays Corporate/ Barclays Wealth & Investment Management
• Recent Activities:
– March 2010 – Company was reorganized into Three Business Groups:
• Global Retail Banking (GRB) (including Absa/African Subsidiary)
• Corporate and Investment Banking
• Wealth Management (CIBWM)
– 2011 Acquired “The Mill” (Digital Effects Co.)
– 2011 Acquired “Eggs” a U.K Credit Card Firm
Structure of Commercial Banking Industry
Industry SIC: #6029 - Commercial Banking
Barclays Key Competitors:
Deutsche Bank
Largest German Bank/CEO Changes / E.U Debt Crisis
2011 - 4th Qtr Income (- 69%)
HSBC
3rd largest U.K Competitor / U.S. Senate Investigation –
Money Laundering - Terrorism
Royal Bank of Scotland
Ranked 7th Globally / Assets 2.1 Bn. /2009 Govt. Bail Out
Porters Five Forces
Entry Barriers (High):
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Economies of Scale – Banking Firms are large providing lower operating costs
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Commercial Banking - Well regulated (Domestic & Foreign)
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E.U., Western Countries, India and Africa are all highly regulated by Local
Governments/Central Banks
– Govt. Decisions: Regulate interest’s rates
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Loans/Bank deposits Controlled tightly.
India Govt. and other countries control number of offices/branches opened.
(Distribution)
Oversight/Control kept on Deposits/Loan Lending / Fees
Barclays Brand Identity is not wide spread (in Africa or India) as well as the other
foreign banks
– Customers like to invest in government or public sector banks (worried about the deposit
safety)
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Rural areas tend to remain untapped/ Governments keep firms from expanding
(Limited Distribution)
Porters Five Forces
• Rivalry - Existing Competitors (High)
• Emerging markets – such as India or Africa
– Substitute banking products
• public agencies & smaller private banks –
• NBFC’s (Non-banking financial companies) - run under separate
regulation standards
• Microfinance lenders - fund small investments in rural areas
• Large Institutions make Acquisitions
• (E.G) Barclays purchasing Absa – an African retail banking firm.
• Brand Identity is blurred
– Many large firms have similar products
Porters Five Forces
• Bargaining Power of Suppliers (Medium)
– Bank Suppliers = Institutions / People
– Raise capital or funds
• Emerging markets - Barclays is a non listed company
– Major sources of capital or funds comes from its immediate customers
or depositors
– These are considered Barclays main suppliers for their emerging
markets.
• According to Scribd.com - Depositors have a High
Bargaining Power in Emerging Markets
– Barclays and other foreign banks usually need to offer a higher interest
rate on consumer deposits than the local banks.
Porters Five Forces
• Bargaining Power of the Customers (Medium)
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Customers in Emerging Markets = Suppliers
(Non-listed Banking Firms)
– Power of Customers = Power of Suppliers.
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Customer has a High Bargaining Power
– Many types’ of Banks/ Lenders operating in the Market
– Offer similar banking services
• Intense Competition Means Need for Higher Interest Rates
– better lending terms
– Increased Customer Service
– Must retain customer loyalties.
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According to Scribd.com - Barclays is reported to rank high on their quality of services
provided by them.
Porters Five Forces
• Threat From Substitute Products (High)
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Substitutes in the retail banking industry
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Banks offer hundreds of Financial Products
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High chance a chief competitor or non-banking financial services company will be offering similar
products and services
Increasing competition (Unconventional companies)
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Other Retail / Business Services
Not just Deposits / Lend Money
Domestic Commerce / Emerging Markets /Globalization
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Private money lenders
NBFCs / Microfinance Programs
Numerous Insurance companies
Sony, General Motors and Microsoft
• Preferred Financing
• Car Companies offering competitive - 0% financing
Highly Fragmented Markets (India /Africa)
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Customers = Higher chance of switching to other substitutes.