How to Buy Barclays Stock in 2021
Barclays is a British universal bank, headquartered in London. The bank operates consumer banking and payments services around the world. It is also a top-tier, full-service, global corporate and investment bank. All of this is supported by a service company that provides technology, operations, and functional services across the group. In the three months to February 2021, Barclays appreciated by over 50%.
Here is our guide to buying Barclays stock.
Learn How to Buy Barclays Stocks in 3 Easy Steps
Find a Broker
You need to open a share dealing account with an online stockbroker that has access to the London Stock Exchange (LSE) or any other stock exchanges where Barclays shares are traded. Go for a broker that charges low commission fees and has no minimum account deposit requirement.
Analyse the Barclays Stock Price Chart
If your fundamental analysis has already led you to consider Barclays stock as a potential purchase, the next step is to check out the price chart to determine the best time to buy. Use the daily trading volumes, price action, and some technical indicators to analyse the trend and any support/resistance levels.
When your technical analysis shows it’s a good time to enter the market, specify the number of shares to buy and place your buy order. Use a market order (which buys the stock at the market price) or a limit order (which ensures you don’t pay more than you want to).
Barclays Company Overview
Barclays is a British universal bank that offers consumer banking and payment services. It is also a top-tier, full service, global corporate and investment bank. Barclays is a trading name of Barclays Bank PLC and its subsidiaries, which are registered in England and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.
Headquartered in London, UK, Barclays has offices in many cities around the world. The bank operates as two divisions — Barclays UK and Barclays International — supported by service company Barclays Execution Services. Barclays has been around for more than 330 years and operates in more than 40 countries, employing over 83,500 people.
Barclays is primarily listed on the London Stock Exchange (with ticker code BARC) and is a component of the FTSE 100 Index. The bank has a secondary listing on the New York Stock Exchange. Owing to its size and presence around the globe, Barclays is considered a systemically important bank (too big to fail) by the Financial Stability Board.
Barclays Business Model and Revenue Streams
Barclays has nine business segments: UK Retail & Business Banking, Europe Retail & Business Banking, Africa Retail & Business Banking, Barclaycard, Investment Bank, Corporate Banking, Wealth & Investment Management, Head Office Functions, and Other Operations. Barclays has a diversified business model, but its UK Retail business remains one of its major revenue drivers.
Investment banking accounts for 40% of the bank’s revenue, while about 60% comes from fixed interest, currencies, and commodities (FICC) business. However, the bank is trimming its trading activities to focus more on retail banking.
Barclays has 15 million personal customers and 750,000 business customers. The corporate banking segment is also a strong driver of revenue. These segments increased the bank’s income by 22% to £12.5 billion in 2020 despite the pandemic's deteriorating economic outlook.
The Barclaycard segment is the eighth-largest payments business globally, bringing in twice as many customers as its retail segment. It is a high return-on-equity business, which Barclays aims to grow. The African retail and business banking segment covers 14m customers in 12 countries. Despite having just 5% of risk assets, Barclays earned 16% of its income from this segment in 2020.
History of Barclays
The origin of Barclays can be traced back to 1690, when John Frame, a Quaker, and Thomas Gould established their banking business in London. The name "Barclays'' was adopted in 1736 when Frame's son-in-law, James Barclay, became a partner.
Barclays was able to extend its network between 1905 and 1916 by acquiring smaller English banks. Another merger occurred in 1925, when the Colonial Bank, National Bank of South Africa, and Anglo-Egyptian Bank were merged with Barclays. In 1938, the bank acquired the first Indian exchange bank, the Central Exchange Bank of India.
Barclays was the first bank to appoint a female manager, Hilda Harding, in 1958. In 1965, Barclays expanded overseas, establishing a US affiliate: Barclays Bank of California, in San Francisco. It was later sold off in 1988 to Wells Fargo for US$125 million in cash.
In 1966, Barclays launched Barclaycard, the first credit card in the United Kingdom. It also introduced the first debit card about two decades later, and in 1968, the bank deployed the world's first cash machine in Enfield (North London). In 1980, Barclays expanded its business segments to include commercial credit after taking over American Credit Corporation.
Following a series of protests against the bank’s involvement with the apartheid regime in South Africa, Barclays sold its business there. In 1996, Barclays bought Wells Fargo Nikko Investment Advisors (WFNIA) and merged it with BZW Investment Management to form Barclays Global Investors. Two years later, in 1998, the BZW business was broken up into various segments, part of which was sold to Credit Suisse. However, Barclays retained the business's debit side, which became what is now known as Barclays Capital. In 1999, Barclays launched an internet service called Barclays.net but later sold it to British Telecom in 2001.
Barclays took over sponsorship of the Premier League in 2004, and the following year, the group moved its headquarters from Lombard Street in the City of London to One Churchill Place in Canary Wharf. That same year, Barclays closed off a £2.6bn takeover of Absa Group Limited, South Africa's largest retail bank, acquiring a 54% stake in the business.
In 2007, Barclays was forced to borrow £1.6 billion (US$3.2 billion) from the Bank of England, a move that is often seen as the last option for any UK bank that cannot settle its debts to other banks at the end of a business day. However, Barclay’s management consistently denied that the bank was facing financial difficulties, stating that the loan was necessary due to a technical problem with their computerized settlement network. The denial failed to ease investors' fears as the company’s shares dropped by 9% leading to a temporary suspension of trading on the stock.
During the 2008 global financial crisis, two days after American bank Lehman Brothers filed for bankruptcy, Barclays announced that it was acquiring its prized investment banking and capital markets segment for just US$250m. Industry watchers and analysts widely regard the deal as a coup. Later in 2009, Barclays sold its Global Investors unit, which included its iShares exchange-traded fund business, to BlackRock for US$13.5 billion.
In 2013, Barclays reported a net loss of £1.04 billion for the 2012 fiscal year. This was its first annual loss in two decades, so it heralded a series of cost-cutting measures, including the 2014 announcement of 19,000 job cuts over three years (beginning with 12,000 jobs cut in 2014). Also, the investment banking segment of the firm shrank by 20% between 2014 and 2016. That same year, Barclays sold its Retail Banking unit in Spain to CaixaBank, and in 2015, it sold its US wealth and investment management business to Stifel for an undisclosed amount.
Furthermore, in 2016, Barclays sold its Africa business amid dwindling profits, and in May 2017, it sold £1.5 billion worth of shares of its Barclays Africa Group subsidiary as part of its strategy to refocus on its business in the UK. Later that year, Barclays sold off the last part of its European retail banking segment. In 2020, Barclays was fined £26 million for how it treated its customers who fell into debt or experienced financial problems.
Brokers that Offer Barclays Shares
Many brokers offer Barclays shares for sale both on the New York Stock Exchange and its London counterpart. Based on commissions, user features of their retailing platforms, and other services, we have shortlisted the best stockbrokers offering Barclays stock on both exchanges.
Should I Invest in Barclays Stock?
In February 2021, the banking sector and most bank stocks, including Barclays, were trading below their fair value due to the economic impact of the coronavirus pandemic. The reopening of the economy, bolstered by the vaccine rollout, should see Barclays and other financial services stocks try to catch up. Indeed, by June 2021, the Barclays share price had returned to the level it was at before the February/March 2020 crash. Therefore, you can consider adding Barclays to your stock portfolio.
Barclays Stock Investment Potential
The year 2020 was a challenging year for Barclays and other banks. Barclays failed to outperform the broader index, with its share price declining by 16% against the FTSE 100’s 11% decline.
Though the bank stands to benefit from the reopening economy, interest rate changes may affect the post-pandemic recovery. However, given the bank’s recent share buyback ambitions, increased capitalization, and cost-cutting measures exemplified by its divestitures, Barclays stock has potential for long-term growth.
What Kinds of Investors Should Include Barclays Stock in their Portfolios?
Ever since Barclays announced a loss in 2013, the stock has been struggling. However, Barclays embarked on a series of cost-cutting measures, including the divestiture of its non-performing assets in Europe, Asia, and Africa. Those measures will likely bring some short-term and long-term benefits, so the stock may appeal to both short-term traders and long-term investors.
How Much Should I Invest in Barclays?
How much you should invest in Barclays shares depends on how much disposable cash you have, your risk appetite, trading style, and other important considerations. However, the general rule of thumb is not to invest more than 2% of your investment portfolio in a single stock, and certainly no more than you can afford to lose.
How to Buy Shares in Barclays Stock?
Shares of many companies can be bought either via a stockbroker or directly from the company through what is known as a direct stock purchase plan (DSPP). Unfortunately, Barclays shares are not offered through DSPP, as the company does not have such a plan in place at the time of writing. So, you can only buy the stock through a stockbroker.
Buy Barclays Shares through a Broker
You can buy Barclay shares from any broker, and the process is somewhat the same. Simply sign in to your trading account and search for Barclays using the appropriate ticker (LSE: BARC or NYSE: BCS). Then, click on the stock and place your buy order. You can then monitor the performance of your Barclays investment via the broker’s online dashboard and choose to buy or sell at any time.
Frequently Asked Questions
Barclays has a primary listing on the London Stock Exchange, and it also has a secondary listing on the New York Stock Exchange. Your broker can buy the stock from any of those exchanges.
The stock is set to recover with the entire market in this post-pandemic era. Moreover, Barclays’ cost-cutting measures will likely pay off in the long term.
Barclays has almost always been profitable. The company reported a loss in 2013, but that was the first loss in two decades. Despite the pandemic, Barclays reported a full-year profit of £1.53 billion for fiscal 2020.
Barclays has been paying consistent dividends for several years. Despite the loss in 2013, the company paid dividends for that fiscal year. In February 2021, the company paid a dividend of £0.055 for the 2020 FY, despite the impact of the pandemic.
Yes! After performing fundamental analysis to determine that the company is in good financial health, it’s necessary to do a technical analysis to know the right time to buy. You may use price action or technical indicators for the analysis.
If you’re trading with leverage, ensure you place a stop-loss order so you don’t lose more than you intended to risk, but be careful not to set the stop loss too close to your entry level nor too far from it. Also, invest with only an amount you can afford to lose and do not commit more than 2% of your investment capital to any single trade.