A Barclays trading desk lost more than $60 million this year amid a bloodbath in distressed assets

FILE PHOTO: Traders work on the trading floor of Barclays Bank at Canary Wharf in London, Britain December 7, 2018. REUTERS/Simon Dawson/File Photo
By the end of August Barclays still had not clawed its way back and remained deep in the red, sources said.

  • Barclays’ distressed-credit team has had a difficult stretch in 2020, and had lost more than $60 million through mid-year, according to people familiar with the matter.
  • Sell-side distressed trading has taken a bath amid the upheaval from Covid-19 even as fixed-income trading numbers have been off the charts in aggregate.
  • The desk at Barclays has had to reckon with vacancies this year, with group head Adam Yarnold out on extended leave and top analyst Brad Sweeney leaving for BNP Paribas. 
  • Amy Silverzweig, the top trader on the desk and a rising star at the firm, has taken a leading role. 
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Barclays’ distressed-credit team has had a challenging run in 2020, posting tens of millions in losses and coping with the absence of senior leaders. 

While its overall fixed-income trading results have been strong, up 83% through mid-year, Barclays’ distressed trading group has struggled, losing more than $60 million, according to people familiar with the results. By the end of August Barclays still had not clawed its way back and remained deep in the red, the sources said. 

That performance mirrors the trend across the industry. Sell-side distressed trading desks have taken big hits on their positions amid the upheaval from Covid-19 even as fixed-income trading numbers have been off the charts.

Through the first six months, distressed-trading teams at investment banks — which make markets in bonds and loans trading at discounted prices, as well as bankruptcy claims, litigation events, and other more complex and special situations — had lost more money than they’d brought in, an industry source familiar with numbers said.  

Even so, Barclays has been among the worst performers in distressed this year, insiders said. Deutsche Bank, usually an industry leader in distressed, has also struggled mightily, Business Insider previously reported

Read more: Inside an exodus at Deutsche Bank’s vaunted credit-trading desk, where even rock stars are feeling a pay squeeze that shows nothing’s off limits from the struggling bank’s cutbacks

A Barclays spokeswoman declined to comment. 

At Barclays, insiders say a substantial chunk of the losses have stemmed from positions in the group’s illiquids book — more esoteric wagers that trade infrequently. 

The firm has also had to reckon with vacancies at the senior ranks. Adam Yarnold has been out for the year on an extended leave of absence, according to people familiar with the matter, effectively leaving Brad Sweeney, the group’s top analyst, and Amy Silverzweig, its top trader, in charge of running the team, with oversight from global head of credit Adeel Khan in London and US credit cohead Drew Mogavero in New York. 

But Sweeney, who would’ve orchestrated many of the firm’s private-market bets, left this summer to reunite with Dan Crowley, the distressed boss at Barclays up until 2016 who now runs all of credit trading at BNP Paribas. Sweeney officially starts at the firm this week as the head of US distressed credit, according to sources familiar with the matter. 

BNP declined to comment. 

That has left Silverzweig, a rising star at Barclays, as the leader on the distressed desk, insiders say, though she hasn’t officially been promoted to head of the group.

Silverzweig, a loan-trading expert known across the street for her colorful personality, joined Barclays in 2018 after 11 years at Goldman Sachs. She quickly elevated the firm’s game, generating more than $40 million in revenue in 2019, according to people familiar with the firm’s performance.

Apart from the desk’s broader struggles, Silverzweig is said to be having a strong year, up more than $50 million. 

https://markets.businessinsider.com/news/stocks/barclays-distressed-credit-lost-60-million-in-first-half-2020-9-1029610722

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