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from Funds Hub:

Utilities vs banks: The evidence

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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.

Is Barclays paying its bankers too much?

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A Barclays sign is seen outside a branch of Barclays bank, in central London in this file picture. REUTERS/Toby Melville  

Barclays top-two — Chief Executive John Varley and President Bob Diamond — declined their 2009 bonus for the second year in a row, although the bank is paying the 23,000 staff at its investment bank £191,000 per head on average. The bank had a record year, but said all bonuses to its Executive Committee would be deferred, as it reacts to widespread criticism on bankers’ pay.

Have your say. Take our poll and leave us a comment.

Do you think Bob Diamond and John Varley did the right thing in declining their bonuses?

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