Barclays sees tougher 2008 as growth opportunity

Barclays sees tougher market conditions in the next year as an opportunity for its investment banking arm to grow and invest, particularly in the US, the bank's president said.

Barclays Capital, under the presidency of Jerry del Missier, has seen spectacular growth over the past decade, but Britain's third-largest bank has yet to match its strong European and Asian debt capital markets presence in the US, where it competes with Wall Street's giants.

"2008 brings one very important change to our priority list, and that's the US. It is difficult to get into the home market of the US bulge-bracket firms, but as we go into 2008, so many of them are retrenching," said Bob Diamond, president of Barclays and head of its investment banking arm.

"I am determined that in two, three or four years' time we don't look back and say this was the market opportunity to move up into the top tier and we flinched," he said.

US banks have been badly scalded by the crisis in the subprime mortgage market, reporting tens of billions of dollars in writedowns and huge capital injections.

Valuations have been battered, but Mr Diamond said Barclays was unlikely to grow its US presence by acquisitions as prices remained too high for the risks involved in a deal.

"(Acquisitions) are very unlikely in the US and very unlikely in investment banking," he told Reuters in an interview. "I would never say never, but I think the success of BarCap is the talent and culture, the organic growth."

Barclays missed out on Dutch bank ABN AMRO last year, with rival Royal Bank of Scotland and two other banks sealing the largest-ever bank takeover instead after a share price drop hit Barclays' cash-and-equity offer. RBS is now facing the complex task of integrating ABN's investment bank in a downturn.

Barclays' investment banking arm has seen strong growth in its Asian and commodities business, and Mr Diamond said he saw that trend continuing, even if oil and other commodity prices come off the boil in 2008.

"Our strong result in commodities ... is not a result of a bull market. If prices deteriorate we are not going to pull back on that business," he said.

"It is always easier to achieve financial success in a trending bull market, but we are not dependent on that at all."