UPDATE: Barcap Aims For Slice Of Swiss Franc Bond Market

Barclays PLC (BCS) said Thursday it will widen operations in Switzerland with several new hires to begin underwriting and trading Swiss franc bonds from Zurich, part of a move to bolster investment-banking services in the lucrative market.

Barclays Capital's efforts aim to snatch market share from Swiss banks, Credit Suisse Group (CS), the overwhelming market leader, and UBS AG (UBS), as well as from others including BNP Paribas SA (BNP.FR), Deutsche Bank AG (DB) and Royal Bank of Scotland Group PLC (RBS.LN).

Barcap aims for a top-three league table spot, behind the two major Swiss banks, and market share of up to 15% in two to three years, the British bank said.

To do so, Barcap's Swiss market head, Kuno Kennel is hiring credit bankers and bond traders, including Martin Meili and Reto Meyer from RBS, and Beda Emmenegger from Credit Suisse.

The push comes at a time when bankers say the Swiss market is drawing far more interest from foreign issuers, and entices with higher fees than the Eurobond market.

Major domestic issues, from the likes of drugmaker Roche Holding AG (ROG.VX) to finance an acquisition, and from abroad, when Australian energy delivery company SP Ausnet (SPN.AU) chose to raise funds in the Switzerland, underscore the increasing importance of the market. SP Ausnet in February sold 475 million Swiss francs ($443.9 million) of 5 1/2-year notes. More recently, Deutsche Telekom AG (DTE.XE) issued CHF400 million of six-year notes.

"At a time when issuers need to look across all currency markets to find access to liquidity, the Swiss franc market is a piece of that which was missing for us," said Jonathan Brown, Barcap's head of European credit syndicate in London.

Switzerland isn't a member of the European Union, and the Swiss franc currency has traditionally been a haven, particularly in times of heightened market tension.

Swiss issues are on average far smaller than their Eurobond cousins, but typically carry more lucrative fees. The Swiss franc bond market is a so-called bought market, meaning an issuer is guaranteed the funds by the bank managing the issue, without a bookbuilding. As a result, fees for banks are typically far richer in Switzerland--15 to 25 cents net commission--than the Eurobond market, where commissions are typically 10 to 20 cents, according to bankers.

"What we have seen in the last two years are that cash products, not just bonds but also stocks, are more important to banks and customers. Not everything should be derivatized--cash is back and we have seen the competition building out their franchises as well," Barcap's head of markets in Switzerland, Kuno Kennel, said.

Barcap's efforts in Zurich come alongside the bank's push to bolster its London-based Swiss franc rates business.

-By Katharina Bart, Dow Jones Newswires; [phone];

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