Martin Talpa

Martin, what makes an investment bank different from traditional banks?

The bank we know from our daily lives is a completely different type of institution. An investment bank comes in the picture for example when a company wants to enter the stock market. To do this, a much specialised type of financial institution is needed; one that can provide the company with corresponding advice and services related to initial public offering. For example in 2014, Barclays listed Alibaba shares amounting to $ 26 billion in the NYSE. Other services provided by investment banks include, for instance, bond issues, consultancy, and financing of acquisitions. To give you an example – in 2016, we assisted with the purchase of Plzeňský Prazdroj by the Asahi group.

That does not sound like an ordinary everyday task.

The entire process is very intricate and always requires the cooperation of a large number of people and teams. First, the bank needs to determine the value of the company and its shares and get hold of a potential buyer. Then, on the day the company enters the stock exchange, the bank purchases the shares at the expected value and continues to trade with them on their own.

Isn’t that too big of a risk for the bank?

It could be, potentially. Determining a company’s worth and estimating whether its shares will be sold and at what price is extremely difficult. Because of this, every bank has a Risk Management department which is responsible for managing risks related to these trades. One of the largest teams in our Barclays IT Centre in Prague develops applications for this precise department.

That sounds like a thrill. What exactly does Risk Management department do?

Risk management is each bank’s most critical area. Let me give you an example from the past: in 2008, a large number of banks went bankrupt, causing a global financial crisis. One of them was Lehman Brothers, and one of the main reasons why this and other banks declared for bankruptcy was the fact that they had lost track of the exact value of their closed deals. When it turned out that the real value was drastically different from the one listed in the books, the bank no longer had a chance to survive. And that is exactly what Risk Management departments try to prevent.

How exactly can you prevent risks?

To put it simply, we calculate the value of each transaction the bank closes, and we determine whether the bank would be in a risk of going bankrupt had the situation on the market changed. That is the risk. And since we are doing significantly better than Lehman Brothers, Barclays managed to buy Lehman’s North American division along with its New York headquarters building several years ago.

So is risk management rather a matter of strategy or mathematics?

We deal with the value of financial assets of all active trades within the entire investment bank. That is a much more complex area than shares, for example. You buy shares on the stock exchange for money, and when you no longer want them, you sell them for money. However, investment banks also deal with more complicated types of trades such as derivative trades. These are the types of deals that are concluded by two financial institutions. They usually have very complex parameters and calculating their cost is a massive mathematical and IT challenge. On order to be able to do so, we have the latest and most advanced computer technology here at Barclays. With these, we are capable of calculating ten thousand possible scenarios for the future and then determining the average cost of the transaction. So I would say it is mostly mathematics in combination with IT.

That is no longer a job for a single team, is it?

Naturally, it is not. We have several teams specialising in financial mathematics; among these are people with PhD titles in mathematics of physics. They focus on the research of mathematical models that can be used for evaluating such transactions. On the basis of their research and formulas, other teams develop automated systems that can calculate the costs. And another colossal infrastructure is needed to tailor the systems to the size of the bank.

Working with such systems must be very difficult.

Considering that we have around ten million active trading positions we need to keep track of, we develop applications for mathematical models that can run these processes a million times. These are incredibly intricate systems, an incredible amount of data and transactions. However, we need to be able to present these data to users in a comprehensible form so that they are able to make the right decisions.

What does your team here in Prague mostly focus on?

What we do here is quite unique for the Czech Republic – we are the only IT centre in the country that develops applications directly for a global investment bank. As a global business, we are interested in what is happening on the Wall Street, in Singapore or in Tokyo. Every day, we are in contact with a number of countries. In the morning, we talk to people in India; during the day, we communicate with people in London; and in the evening, we are in touch with people in New York. On top of that, we also constantly follow all the social events and their impact on our business. To do so, we need special technologies, systems and applications. And we have a team specialising in the development of such applications here in Prague.

So people in Barclays’ IT centre in Prague are mostly programmers?

Being a competent programmer is a must for us, but that alone is not enough. It is important that the person is able to face all kinds of challenges. Being willing to acknowledge a problem and cooperating with people of all cultures is crucial. This is why it is so important for us to be able to communicate both in words and in writing, primarily in English – along with our colleagues across the continents, we all are part of one global team.

Can you evaluate pros and cons of working for such a large international company as Barclays?

It is often very difficult to see the real results of your own work. There are dozens, sometimes even hundreds of people involved in the development of applications, and so it is almost impossible to see the direct impact of one person’s activity. However, the end result far extends beyond the possibilities of an individual. And that is fantastic.

How are you successful with recruiting IT specialists in today’s highly competitive labour market?

The situation today is complicated for any company, especially for one which plans to hire significant amount of top programmers within a single year – that is our case right now. For these positions, we need to pick employees very carefully; this is why we look for candidates not only in the Czech Republic, but across Europe and often even outside Europe. We offer relocation assistance to competent candidates outside the Czech Republic including taking care of visa and work permits for them. Last year, we managed to fill a total of 146 positions with 22% of them being occupied by internal candidates who moved to a different position or were promoted.

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