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00:00Let me just start off by asking you quite simply, how is Barclays affirming its footprints in the
00:06kingdom? Thank you, Jihana. Thank you for having me. We are very excited to be here. We've been
00:12in the Middle East for about 130 years through the region and in the kingdom right now. We are
00:19establishing our regional headquarters. We are in the process of getting all the appropriate
00:24investment banking and other licenses, and we're very hopeful that it'll happen quickly. The
00:29Saudi government has been extremely welcoming, extremely helpful to us in both telling us
00:37what to do and navigating us through it. And we think it's a great place to be. So we're
00:42also opening our new headquarters here, which we hope to have set up sometime in the new
00:47year. Okay. Do you have any plans for headcounts for the new office? Can you give us any more
00:52details about where it's going to be, headcount numbers? Yeah. The office will be in the King
00:56Abdullah Financial District, and we're getting enough to sort of have a good-sized office.
01:01You know, we'll build it up as we get the licenses and as we move.
01:05Yeah. And for me, I mean, when I look back at sort of the evolution of Barclays in the region,
01:11it was back in 2014 where I believe the investment banking license was canceled. And then we fast
01:17forward almost a decade later, you're coming back into the kingdom. At the time, we reported that there
01:22was a lot of competition coming through from some of the local banks. Why is this time going to be
01:26different? Well, Barclays is different. Saudi is progressing. And the UK-Saudi relationship
01:32is extremely strong. We represent all parts of that. We have a great global investment bank,
01:39and we think it's important to lead with that. We are not here to compete in retail. The Saudi and
01:45the local banks have an important role to play in this economy. We're there to help. We're there to
01:50provide the connection with the rest of the world, help bring in direct investment,
01:54help actually bring in liquidity. You know, if there were reports, you would have seen it,
01:58that Saudi banks themselves have so much lending to do that actually this economy could use some
02:04foreign lending. We hope to be part of that. And the connection with London between Saudi Arabia
02:09and London is very old and very deep. Yeah. Last week around earnings, you did say that you're
02:16happy with how the investment bank is doing in terms of, this is a quote, positive jobs,
02:19improving profitability, but there's scope to get more done in terms of boosting IPOs,
02:25equity-linked business, and M&A. Where does the Middle East fit into that?
02:30It's a very, very important part of it. I mean, you know, there was a lot of activity last year in
02:35Saudi Arabia and actually in the region. You know, the regional exchanges have seen a lot of activity.
02:42In addition, their investment flows, and the important thing about investment flows,
02:47is it used to be out of the region, into the Europe, into the United States, where,
02:52of course, we have a very strong presence. Now there's a lot coming back into the region. It's
02:57two-way. And I think that's the part where we can help. Yeah. And I saw also that you acted as
03:03one of the book runners on the PIF's debut euro green bonds. And what we are seeing is an increased
03:11amount of borrowing and issuance coming through from the kingdom. Surely that also presents an
03:16opportunity. It presents a great opportunity. The Saudi sovereign, the kingdom itself, is issuing a lot
03:23more sovereign debt. Institutions like the PIF, the one you mentioned, have. And it was great for us to be
03:29part of that bond, representing as it does both sustainability and Saudi.
03:33Okay. So we've spoken about investment banking. How are you doing the growth of the wealth business
03:37in this part of the world as well? So wealth is growing enormously, both the development of regional
03:42wealth and then actually the movement of people into Dubai, which is becoming a fairly big offshore
03:49center for wealth. We've got a presence there. And I think it is to help people, you know,
03:55save and grow for the next generation and the generation after that. That's what the country
04:00of Saudi Arabia is doing through its institutions. That's what we want to help the people to do.
04:04Yeah. We were reporting on how HSBC's Middle East wealth business was under scrutiny by the regulators
04:13and it's impacted their ability to transact with a number of clients in the region. Do you sense this
04:19as potentially an opportunity to pick up market share and wealth?
04:22No, look, I think there's enough room in the region for all the great banks.
04:27And what we will do is do it in our own way, in our own style and, you know, hope to serve the region.
04:34Okay. So you mentioned the number of people moving to Dubai, but we also hear and we report on it on
04:39Bloomberg all the time, the number of asset managers, hedge funds moving to Dubai and Abu Dhabi as well.
04:43Do you see that as opening up an opportunity in the sense of maybe you can expand your, you know,
04:48prime brokerage services to cater for all of these asset managers that are moving to the region as well?
04:54That's already happening. We've catered many of them through London and we will look to follow
05:01our clients to where they are. And I think as the critical mass builds, you should expect us to see
05:06us do more and more in the region.
05:09Yeah. Okay. So bright spots, bright growth spots around the world. Let's talk about
05:13the rest of the world. We have a Fed meeting coming up this week. They are likely to cut
05:19interest rates, but, you know, you look at U.S. GDP numbers and we're still printing north of 3%.
05:25I mean, how do you see the U.S. economy here?
05:29We continue to see signs of strength. Of course, right now in the month of October,
05:33because of the government shutdown, we don't have as much real-time data as we would normally have.
05:39And so for those of us outside, it is difficult to handicap exactly what's going on with employment,
05:45which is the most important part of this. But we do think that the economy continues to perform
05:51reasonably well, that credit conditions continue to be strong. Employment, we think, continues to hold.
05:58But there is the effect of tariffs, which is a little bit uncertain. So we have to see,
06:05but I think the expectation is that the Fed cuts a bit.
06:07Lots of academic circles have been talking about this K-shaped economy and the fact that
06:12upper-income earners are thriving, but lower-income are struggling. You know,
06:17real wages are declining, struggling to keep up with inflation. Are you seeing any signs of that
06:21in your consumer business?
06:24We see continued consumer strength. And that consumer strength, which we see both in the U.K.
06:31and the U.S., comes from people improving their balance sheet. They're being very conservative.
06:36So perhaps they're acting as if there's a K-shaped economy because they are saving for the future
06:43and savings rates are going up. But I think this is a phenomenon that's been happening over a long
06:50period of time. Lots of academic writers have written about it, which is that there's a lot
06:56of wealth growth at the high end of the economy, driven in part by the equity markets, especially
07:02in the U.S. I think that's part of the reason why it's important for everybody to participate in the
07:08equity markets to the degree they can and appropriate to their own risk level, because it is a source of
07:14wealth and it is less represented in portfolios, especially in Western Europe and the U.K.
07:19Yeah, yeah, that's a very good point. And obviously there's a big budget coming up in the U.K. later
07:23this month, next month. But let me just come back to what I was saying. The reason I'm asking you about
07:29the health of the U.S. consumer is all of a sudden people have started getting a bit worried about
07:33credit conditions in the U.S. And, you know, my colleagues in Bloomberg last week asked you
07:39about, you know, certain exposure that you had as a bank. But do you see signs of perhaps credit
07:47deterioration? Are you becoming perhaps a lot more vigilant about the type of lending that you're doing
07:52based on the Tricolor and First Brands experience? Well, we didn't have First Brands. We had Tricolor,
07:58but we are absolutely becoming more vigilant because I think whenever you have fraud, you've
08:03got to understand what you can learn from it, what early warning signs there might be. And you have
08:07to look across the portfolio. You know, credit is something you do throughout the cycle. But every
08:15time there is an unexpected loss in credit, you have to learn. And I think it's important to be
08:20vigilant. You know, we've also said I've said it many times through this year that we're at the end of a
08:2615-year-long credit cycle. And so you've got to be cautious as credit cycles grow longer and longer
08:32and longer. Then you have incidents like this which cause you to be more vigilant. And then we have
08:36the economy, which, as we said just now, seems to be at some sort of an inflection point. So all of
08:42that tells you you've got to be a little more vigilant. Yeah. When you look at valuations in credits
08:47and equity, do you feel that there's a risk that this is going to fuel more and more speculative
08:52behavior and that credit standards are going to begin to get watered down simply because people are chasing
08:58returns? There's always the risk late in the credit cycle that people are chasing returns, as you say. I think on the
09:06equity market, obviously, there is a part of that market AI related, which is doing extremely, extremely well.
09:13There's tremendous amount of allocation into it. Whenever you have these vast amounts of allocation, there's always a risk of
09:21of misallocation. By the way, that doesn't mean that shouldn't happen because people, I think, account for that in their returns
09:27forecast. But for those who are lending, you know, we've got to be careful because the bank is the lender.
09:33Okay. So putting that all together, how do you see the momentum going into the last quarter of the year in terms of just
09:40deal-making? Obviously, there's a shutdown now, so that's hampering some of the IPO activity. But, you know, are these signals
09:46positive as we head into the last quarter of the year?
09:48So I think the signals are positive, and I would look at it more fundamentally. We have interest rates which are stable. We've got credit
09:57spreads which are still relatively low. So borrowing costs are still relatively stable. And then what is happening with AI and the
10:05change in technology is causing lots of companies to look at their business models and see where they can become more
10:12effective. It's in part what is spurring a lot of the M&A activity. So we think those fundamental forces will continue through the
10:21rest of this year. We've only got two months left and into next year.
10:25Yeah. Since you bring up AI, how is AI altering how you think about your business?
10:30It's altering how we think about it in a fundamental way. We are taking, we have some very important projects to
10:39try to get the best out of it and to understand how to get the best out of it.
10:43So there's technology at one side, there's making it available to our staff, which we have done. And then there is
10:50changing end-to-end business processes and doing them through the lens of AI. That is the difficult part. And that's the
10:57part that requires a lot of discipline and commitment. And that's what we're trying to do.
11:02Yeah. Ultimately, though, so many banks are spending a lot on AI and AI applications. What is the likelihood that you
11:10actually get that return on investment? And I think there's this widely referenced MIT paper saying 95% of these AI
11:17applications are not generating a return on investment. Do you have to be patient or do you have to be more realistic in
11:23terms of what you can expect?
11:25You have to be selective and patient. And I think you have to be realistic. So I think that comes into the selectivity.
11:31You can't just take a quarter of a process and make it AI enabled and the rest of it not. You can't just have
11:38lots and lots of experiments. You have to give it in the arms of people so that they understand what the
11:43potential is and they can, in their own small ways, improve their lives like we've all done with the
11:48internet, like we've all done with a personal computer. But then there are giant processes, which are true in big
11:53banks, that you have to fundamentally reshape.
11:56Yeah. Is AI going to replace junior banker jobs?
12:01I hope not. I hope what we do is that we take AI and we make the lives of all of our people more
12:08productive, whether they're junior bankers, whether they're junior traders, whether they are people in
12:13operations and in customer service. I think if we look at it through the lens of empowerment and
12:19enablement, we will get to a better answer for both the company and for society than if we look at it as a bit of a
12:25zero-sum game.
12:26I'm going to ask you one question about the UK budget because I don't think we're going to get an
12:31opportunity to speak to you before the budget happens. Do you think that this budget will be
12:37friendly towards the UK banking system? Or do you hope that it will be?
12:41Well, I certainly hope it is. I have to say the chancellor is here this week. She's here today leading a
12:46delegation, and we'll be part of that. I think this government has been extremely friendly to the
12:55private sector and to the financial services sector and to banking. They recognize our importance to
13:01the UK economy and to the UK's role in global trade. And so we see this as a joint interest between the
13:10country and ourselves.
13:11Yeah. Can you tax your way to growth?
13:13Maybe that's a question for the chancellor.
13:15Not for me to answer.
13:16.
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