Money managers under the microscope
Utilities vs banks: The evidence
Alpesh Patel caused quite a stir on Britain’s Radio 4 this morning. The CEO of boutique investment house Praefinium Partners argued that Bob Diamond was on “a suicide mission to bring down capitalism”. No word yet from the Barclays CEO on that one.
Maybe that was just the line his PRs had promised to the BBC producers to get him on air, though, and there is more logic to Patel’s more substantial point about value creation in the banking sector in relation to bonuses and pay.
“What concerns me is higher salaries for what? In 14 years they have managed to add absolutely zero to the share price of Barclays… you’d think someone in banking would know which direction a share price is supposed to go in.”
Perhaps Patel’s most enticing comment was to suggest that utilities CEOs would make better banking executives, saying that Diamond should call on BG Group’s boss Frank Chapman to step in “to run [the] business properly and help those share prices go in the right direction because it helps pensioners and it helps consumers who might be shareholders.”
So just how well are those utilities chiefs doing against the.. err… morally-complex banking execs? One of our graphics gurus has knocked up the below to show how total returns match up in a few sectors. Draw your own conclusions.