ALEX BRUMMER: Boss Jes Staley in the crosshairs, but breaking up Barclays should not be an option
Barclays past and present is very much in focus. In Southwark, former chief executive John Varley and three other Barclays bosses, Roger Jenkins, Tom Kalaris and Richard Boath, are on trial for alleged offences dating back to actions taken in 2008 to protect the bank. All four deny the charges.
In the elevated environs of Davos, the current Barclays chief executive, American Jes Staley, is seeking to protect the bank from the unwanted attentions of maverick corporate raider Ed Bramson.
Just to complicate matters even further, the former chief executive Bob Diamond, who stepped down after the Libor fixing scandal, has made a guest appearance in a FT column. He sensibly urges the EU-27 to come up with a decent future trading arrangement with Britain.
Fighting back: Barclays boss Jes Staley is seeking to protect the bank from the attentions of Ed Bramson
Bramson, the British financier who lives in New York, argues that Barclays would be better sticking to its knitting as a UK commercial and consumer bank, leaving the complexities of investment banking to the big boys on Wall Street. Irony is that one of the biggest players in investment banking, Goldman Sachs, is busy changing direction and challenging Barclays and other UK retail lenders with its online bank Marcus.
What Bramson fails to acknowledge is that Barclays has a good pedigree in investment banking with expertise in debt markets. It has a strong client list in the US, inherited from Lehman in New York, as well as a stellar following in the City. Among its recent big deals was the work for Sky investors in achieving a £30 billion price from American buyer Comcast. As Europe’s only functioning full service investment bank, Barclays is amazingly well placed inside or outside the European Union.
No one should underestimate Bramson. His previous raids on the British financial sector produced stupendous returns for City backers. But they have also resulted in the defenestration of important financial firms – most notably Electra, a trust which backed enterprise and entrepreneurship. The message from mega fund manager BlackRock, financiers and captains of industry in Davos is that business needs to have purpose beyond profits. There are indications that British investors are getting the message and reassuring Barclays of support. But there is no doubt that some long investors are conflicted because of holdings in Bramson’s Sherborne funds.
American investors may be more inclined to back the Brit in New York exile against the American, former JP Morgan chief executive Staley, reviving Barclays. No wonder there is confusion. Breaking up Barclays should not be an option.
Now it is official. The president of the European Central Bank (ECB) Mario Draghi says the risks for the euro area economies are on the ‘downside’.
Much of the emphasis in Frankfurt is on the global factors hurting eurozone recovery. These included the US-China trade dispute, China’s marked slowdown and market volatility. He also mentioned sector problems by which he doubtlessly was referring to the German car industry’s difficulty in adjusting to tougher emissions standards following the Volkswagen scandal.
Draghi and the ECB may be regretting that a halt has been called to the £2.3 trillion bond buying, which breathed some life into the eurozone. Clearly the ECB is offering businesses and consumers some reassurance by reinvesting in maturing bonds.
It is also pledging it won’t be chasing US interest rates up and will hold the ECB’s deposit rate in negative territory at -0.4 per cent and its key rate at 0 per cent until the summer.
The ECB could also use its short-term lending window to make sure euro area banks have enough liquidity.
The stresses in the eurozone economies might by now have led Brussels to blink in the Brexit negotiations.
But when Grexit (Greece’s departure from the eurozone) was an issue Brussels didn’t yield until the final hour when ordered to do so by political overlords.
Recovery in the Vodafone share price following the second quarter results turned out to be short lived.
The shares tumbled 3.5 per cent in latest trading and have fallen back to 144p where they are 51 per cent lower over the last 52-weeks.
Disappointing trading from South Africa was the main driver and there is anxiety as to what the third quarter, due today, will look like given softening of global output.
The dividend of 9 per cent, for a FTSE 100 mainstay, is starting to stick out like a sore thumb.