Commentaries
Now raising intellectual capital
Now watch banks slither round the bonus curbs
Marcus Agius, the immensely wise chairman of Barclays, told a Spectator conference this week that his board paid “as little as we can get away with” to the hotshots under his command, but that to get the best, he had to pay the going rate.
Asked from the floor whether the (reported) 500 million dollars paid to Dick Fuld before the collapse of Lehman Brothers meant that he was the best, Agius could only mumble that he didn’t know Mr Fuld.
A few hours later, Barclays unveiled its latest answer to the popular demand that something be done to curb the grotesque rewards of the gilded few in banking. It is shuffling $12.3 billion of its grottiest assets, and the department in charge of them, off into a Cayman Island company which is barely credible as a stand-alone business.
The deal was greeted with almost universal criticism, but that will hardly worry Stephen King and Michael Keeley, its architects. As the announcement made clear, the “management fees and distributions to the partners” (at 7 percent) would be the priority payments. Any cash flow left over goes to service Barclays’ $12.6 billion loan (at US Libor plus 2.75 percent, or about 3 percent currently) and if things go wrong, the Barclays shareholders are back on the hook.
Giving props to Wall Street’s risks
Wall Street would like you to believe that when investment banks take on risk they are largely doing it for the benefit of investors — maybe even you and me.
Bankers say much of the capital that their firms put at risk each day is to complete trades for big corporations, mutual funds, pension funds, hedge funds and university endowments. And contrary to the conventional wisdom, proprietary trading — bets made for a bank’s own behalf — is really just a small part of their business.
Barclays risky assets move a little too cozy
Barclays has come up with an interesting way to solve an optical problem. Concerned that the bank’s shareholders are nervous about possible future writedowns of wobbly assets with a value of $12.3 billion, it has sold them to its own employees.
This isn’t necessarily a bad idea. But there are two things to dislike about this deal. First, it looks pretty cozy to sell to your own workers. And second, the deal looks potentially very favourable for the purchasers.
Qatar will need to keep driving Porsche hard
It has taken a long time, but the Porsche clan is finally — and no doubt reluctantly — giving outsiders a say in how it runs the family firm.
The Porsche and Piech families — the descendents of Ferdinand Porsche –are selling a 10 percent voting stake in the Porsche holding company to Qatar in order to get them out of the financial mess they found themselves in when Porsche tried an audacious takeover of Volkswagen.
from Margaret Doyle:
HSBC tortoise will outpace Barclays hare
Barclays’ and HSBC’s interim results are a study in contrasts. Barclays has used the credit crunch to make a bet-the-farm move into the investment banking big-league, a bet that has so far paid off. HSBC, in comparison, chastened by its flawed move into the US subprime market, has returned to its conservative roots.
John Varley, Barclays’ chief executive, gives the usual guff about “staying close to our customers and clients”. In truth, Barclays’ 3 billion pounds of profit in the first half owes much more to its investment banking division, enlarged by its opportunistic acquisition of Lehman Brothers’ North American business last autumn, than to its traditional banking businesses.
Bob Diamond in the red
Just how profitable is Barclays Capital?
At first glance, the answer would be: very. According to Barclays’ results, Bob Diamond’s investment banking empire made a £1bn profit in the first six months of the year, double last year’s figure. That’s despite continuing hefty write-downs on toxic assets.
Indeed, as other parts of Barclays succumb to the economic downturn, Barcap, buoyed by last autumn’s acquisition of the North American operations of Lehman Brothers, more or less appears to be keeping the bank afloat.
Barclays’ yo-yo balance sheet
Talk about deleveraging. By far the most striking number in Barclays’ first-half profits concerns its balance sheet:
Our total assets decreased by £508bn to £1,545bn over the first half of 2009.
Given the stated desire by regulators – and investors – for banks to shrink their balance sheets, a 25 per cent reduction in total assets in the space of just six months has to be applauded, right?
Blonde ambition thwarted
Like most of the City of London, I’ve been fascinated with Amanda Staveley for some time. Ever since she burst onto the scene last autumn as the go-between in the 3.5 billion pound investment in Britain’s Barclays by Sheikh Mansour bin Zayed al-Nahyan, the Abu Dhabi prince, she has sparked admiration and scepticism in equal measure.
Reports that she earned a 40 million pound fee for her role in the deal sparked a frenzy of (largely positive) press coverage which gleefully revisited her past as, among other things, a former model and one of Prince Andrew’s former girlfriends.
-
The Wall
