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Barclays saga takes new twist with Rake's progress to Worldpay Barclays saga takes new twist with Rake's progress to Worldpay
(about 3 hours later)
Barclays’ boardroom has produced a few memorable soap operas over the years and the latest show promises to be a classic of the genre. The plot is developing at a cracking pace, even if it is a little tricky to follow at times. Let’s try to recap the events of the last eight days: Barclays’ boardroom has produced a few memorable soap operas over the years and the latest show promises to be a classic of the genre. The plot is developing at a cracking pace, even if it is a little tricky to follow at times.
Antony Jenkins, the saintly chief executive, was dispatched in brutal fashion. Not up to the job, was the almost-official explanation. In an unusual move, deputy chairman Sir Michael Rake was named as the assassin-in-chief. But was that the whole story? Did investment banking boss Tom King, lurking in the wings, put him up to it? Or did newly arrived chairman John McFarlane fancy running Barclays himself until he could pick his own chief executive? Let’s try to recap the events of the last eight days: Antony Jenkins, the saintly chief executive, was dispatched in brutal fashion. Not up to the job, was the almost-official explanation. In an unusual move, deputy chairman Sir Michael Rake was named as the assassin-in-chief. But was that the whole story? Did investment banking boss Tom King, lurking in the wings, put him up to it? Or did newly arrived chairman John McFarlane fancy running Barclays himself until he could pick his own chief executive?
Now comes the twist: Rake himself is off. He will be the new chairman of Worldpay, declaring improbably that “the payments industry has never been more exciting”. Come, come, surely chairing Worldpay can’t be as entertaining as chairing Barclays. That is the post Rake was assumed to crave until McFarlane was plucked from outside the bank. Was the boardroom not big enough for the two of them?Now comes the twist: Rake himself is off. He will be the new chairman of Worldpay, declaring improbably that “the payments industry has never been more exciting”. Come, come, surely chairing Worldpay can’t be as entertaining as chairing Barclays. That is the post Rake was assumed to crave until McFarlane was plucked from outside the bank. Was the boardroom not big enough for the two of them?
Bizarrely, the Barclays scriptwriters allowed a sliver of suspense, and the potential for fresh surprises, in yesterday’s belated stock exchange statement. Rake “intends” to stay until the end of 2015 and “if and when” he stands down he will be replaced as senior independent director. “If” he stands down? Really? He’s been on the board for nine years and now has four other jobs, including the chairmanship of BT.Bizarrely, the Barclays scriptwriters allowed a sliver of suspense, and the potential for fresh surprises, in yesterday’s belated stock exchange statement. Rake “intends” to stay until the end of 2015 and “if and when” he stands down he will be replaced as senior independent director. “If” he stands down? Really? He’s been on the board for nine years and now has four other jobs, including the chairmanship of BT.
What does it all mean for Barclays’ strategy? Hard to say. McFarlane was billed as the type of no-nonsense figure who might take an axe to the underperforming investment bank, and thereby be decisive where Jenkins had dithered. But he’s not playing to character. Instead, he’s hinting at expanding parts of the investment bank, but only the soft bits that don’t gobble capital. Nice idea on paper, but running half an investment bank carries its own risks.What does it all mean for Barclays’ strategy? Hard to say. McFarlane was billed as the type of no-nonsense figure who might take an axe to the underperforming investment bank, and thereby be decisive where Jenkins had dithered. But he’s not playing to character. Instead, he’s hinting at expanding parts of the investment bank, but only the soft bits that don’t gobble capital. Nice idea on paper, but running half an investment bank carries its own risks.
The excitement in the boardroom hasn’t affected the share price. Barclays’ investors are taking it in their stride, which can be seen as a vote of confidence in McFarlane’s cost-conscious style. Fair enough for now: change never happens smoothly at Barclays. All the same, you would still expect a grown-up bank to be able to say plainly that Rake is actually going.The excitement in the boardroom hasn’t affected the share price. Barclays’ investors are taking it in their stride, which can be seen as a vote of confidence in McFarlane’s cost-conscious style. Fair enough for now: change never happens smoothly at Barclays. All the same, you would still expect a grown-up bank to be able to say plainly that Rake is actually going.
Big trouble in ChinaBig trouble in China
One problem with manipulating your stock market, as the Chinese authorities have been trying to do for the past few weeks, is that people wonder what else you might be tempted to prettify.One problem with manipulating your stock market, as the Chinese authorities have been trying to do for the past few weeks, is that people wonder what else you might be tempted to prettify.
Thus China’s second quarter GDP figures were greeted with even more scepticism than usual yesterday. A figure of 7% – the same as the first quarter and slightly above most economists’ expectations – seemed very convenient in the context of Beijing’s battle to prevent share prices falling further. Look, it seemed to scream, the economy is bang on track to meet this year’s target of ... 7%.Thus China’s second quarter GDP figures were greeted with even more scepticism than usual yesterday. A figure of 7% – the same as the first quarter and slightly above most economists’ expectations – seemed very convenient in the context of Beijing’s battle to prevent share prices falling further. Look, it seemed to scream, the economy is bang on track to meet this year’s target of ... 7%.
Well, maybe. But, even if one takes the GDP number at face value, the embarrassing scenes in the Chinese stock market are not clearing quickly. There were big jumps in share prices at the end of last week but yesterday brought falls. Trading in about a quarter of Chinese stocks is still suspended. The saga is not over yet.Well, maybe. But, even if one takes the GDP number at face value, the embarrassing scenes in the Chinese stock market are not clearing quickly. There were big jumps in share prices at the end of last week but yesterday brought falls. Trading in about a quarter of Chinese stocks is still suspended. The saga is not over yet.
The consensus among economists is that the real economy won’t be damaged directly by the 30%-ish decline in share prices. It’s a reasonable view. Despite 90 million Chinese reputedly having share accounts, only about 10% of household wealthy is in equities. What’s more, not all those millions are Johnny-come-latelys who arrived just before the cracks appeared.The consensus among economists is that the real economy won’t be damaged directly by the 30%-ish decline in share prices. It’s a reasonable view. Despite 90 million Chinese reputedly having share accounts, only about 10% of household wealthy is in equities. What’s more, not all those millions are Johnny-come-latelys who arrived just before the cracks appeared.
But take a step back. The stock market bubble is just one of several over-heated features of the Chinese economy. Credit Suisse’s analysts spy a triple bubble – “the third-biggest credit bubble, the biggest investment bubble and the second-biggest real estate bubble of all time.” But take a step back. The stock market bubble is just one of several over-heated features of the Chinese economy. Credit Suisse’s analysts spy a triple bubble – “the third-biggest credit bubble, the biggest investment bubble and the second-biggest real estate bubble of all time”.
The worry in that cocktail should be obvious: if the Chinese can’t handle the end of the stock market bubble, they might really struggle with a far more dangerous property crash.The worry in that cocktail should be obvious: if the Chinese can’t handle the end of the stock market bubble, they might really struggle with a far more dangerous property crash.
The beer talkingThe beer talking
Tim Martin of JD Wetherspoon, the country’s most successful publican, likes a grumble but the Tories’ new “national living wage” will cause him little trouble. It only applies to staff aged 25 and over. It also starts at £7.20 an hour in October. By then, Wetherspooon’s bar staff will be earning an average of £7.32 – a figure that includes those under 25. Stick to complaining about business rates for pubs, Tim, that’s a better fight where you are more likely to get the result you want.Tim Martin of JD Wetherspoon, the country’s most successful publican, likes a grumble but the Tories’ new “national living wage” will cause him little trouble. It only applies to staff aged 25 and over. It also starts at £7.20 an hour in October. By then, Wetherspooon’s bar staff will be earning an average of £7.32 – a figure that includes those under 25. Stick to complaining about business rates for pubs, Tim, that’s a better fight where you are more likely to get the result you want.