¶ … Product, Distribution
Should Barclay's Caribbean Operations Merge?
The strategy for Barclay in the Caribbean is to consider the market as a small share of the global commercial and investment banking market. Business units that operate in the Caribbean or West Indies are seen as offshore business operations with emerging onshore business. (Wood, Beamish, 2004) The units have also focused on reducing operational risk exposure as ameans to drive revenue growth. Such a strategy is rather conservative and represents a risk-free growth rate for Barclay's Caribbean operations.
Barclay's operations are extensive and span the globe with offices and accounts on six of seven continents. "Corporate and business services are offered in all 14 countries, and offshore banking services are offered in the Bahamas, Barbados, Cayman, the British Virgin Islands (BVI), and Turks & Caicos. Corporate banking accounts for 45% of corporate income, personal banking 27 per cent and offshore banking 28 per cent." (Wood, Beamish, 2004)
The operation Barclay's manages in the Caribbean is rather small compared to its total portfolio of $5.2 billion assets under management (AUM). The 72.6 million managed throughout the Caribbean represents 1.92 per cent of Barclay's total AUM. Indeed, the amount of its Caribbean investment is a rather small percentage of the total AUM. (Wood, Beamish, 2004)
Competitive Strategy in the Caribbean focuses on competing against the prime competitor in the market, CIBC. New market entrants include banks such as CitiGroup, which is a multinational powerhouse and seeking to remove market share from Barclay's operation in the Caribbean. "The onshore retail and corporate businesses, competition comes from large Canadian banks (principally CIBC, Royal Bank of Canada and Scotiabank) and from regional indigenous banks (e.g. Republic Bank of Trinidad)." (Wood, Beamish, 2004)
The current strategy is working as assets in the Caribbean grew as a percentage of total assets under management. Offshore operations should become of greater focus of the Caribbean operations for Barclay's and either divest other divisions or sell off units to competitors. Competition is increasing for Barclay's and the level of success received in offshore operations is reason to consider expansion in that area.
Marketing strategy for Barclay's should exceed current levels in order to avoid the need to merge with CIBC. The proposed strategy of merging with CIBC will yield 3 major accounts at a price that perhaps could be avoided should an extensive marketing plan be launched and targeted to obtain market share from CIBC. These accounts include The Bahamas, Barbados, and The Cayman Islands. To a lesser extent, the British Virgin Islands, St. Lucia, and Turks and Caicos Islands have accounts worth mentioning with CIBC.
These accounts are primarily personal customer accounts with CIBC and not business accounts. Personal customer accounts are easier targets for a marketing plan to obtain these customers and increase market share. "FirstCaribbean, created in 2002 to combine the Caribbean operations of Barclays and CIBC, is the English-speaking Caribbean's largest bank, doing business on 26 islands and territories. It's pan-regional presence allows the ban to offer a one-stop approach for investors. It offers international mortgage loans, for example, for purchasers of residential real estate in Barbados, the Bahamas, Belize, the British Virgin Islands, the Cayman Islands, St. Kitts, St. Lucia, and the Turks & Caicos." (Platt, Hawser, Neville, Green, 2005)
Barclay's in the mid stage life cycle of the Caribbean market. The early stage had Barclay's and CIBC competing for the lion's share of the aggregate banking market. As additional banks now enter the market and compete for personal and commercial business, the market becomes ever more dynamic and subject to change. "In addition to the retail and commercial services, major banks in the Caribbean also serve the U.S.$1.1 billion capital markets in the region. The capital markets business in the West Indies is composed mainly of debt financing arrangements. It is considered a new and emerging sector comprising eight players in this marketplace." (Wood, Beamish, 2004)
The life cycle stage is different from the current strategy as a 'dividend' type policy is what...
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