Nomura rounds up markets’ biggest misses in 2016

Forecasting markets a year in advance is never easy, but with “year-ahead investment themes” season well underway, Nomura has provided a handy reminder of quite how difficult it is, with an overview of markets’ biggest hits and misses (OK, mostly misses) from the start of 2016. The biggest miss among analysts, according to Nomura’s Sam […]

Continue Reading


Spanish construction rebuilds after market collapse

Property developer Olivier Crambade founded Therus Invest in Madrid in 2004 to build offices and retail space. For five years business went quite well, and Therus developed and sold more than €300m of properties. Then Spain’s economy imploded, taking property with it, and Mr Crambade spent six years tending to Dhamma Energy, a solar energy […]

Continue Reading


Euro suffers worst month against the pound since financial crisis

Political risks are still all the rage in the currency markets. The euro has suffered its worst slump against the pound since 2009 in November, as investors hone in on a series of looming battles between eurosceptic populists and establishment parties at the ballot box. The single currency has shed 4.5 per cent against sterling […]

Continue Reading


RBS falls 2% after failing BoE stress test

Royal Bank of Scotland shares have slipped 2 per cent in early trading this morning, after the state-controlled lender emerged as the biggest loser in the Bank of England’s latest round of annual stress tests. The lender has now given regulators a plan to bulk up its capital levels by cutting costs and selling assets, […]

Continue Reading


China capital curbs reflect buyer’s remorse over market reforms

Last year the reformist head of China’s central bank convinced his Communist party bosses to give market forces a bigger say in setting the renminbi’s daily “reference rate” against the US dollar. In return, Zhou Xiaochuan assured his more conservative party colleagues that the redback would finally secure coveted recognition as an official reserve currency […]

Continue Reading

Categorized | Banks, Financial

Jenkins takes Barclays at the right time

Posted on August 31, 2012

On the day that Antony Jenkins was appointed chief executive of Barclays this week, the “Q” word most associated with the venerable UK high street bank was Qatar, not Quaker.

It says something about the changed nature of the bank that his immediate task is to navigate a Serious Fraud Office inquiry into payments made to Middle Eastern officials rather than to visit some branches in Norfolk. Barclays, like most other banks, isn’t quite the place it used to be.

    The appointment of Mr Jenkins, a career-long commercial banker at Barclays, is the product of a profound nostalgia on the part of governments, regulators and benighted taxpayers. They are eager to get rid of the investment banking culture that came to dominate many banks in the 1990s and 2000s, and return to them the safer world of the cautious, stuffy Quaker families who founded Barclays.

    At some level, this is an illusion. Not only are retail banks entirely capable of losing billions on property lending without help from bonus-hungry traders, but deregulation and new technology mean banks can never entirely regain their former oligopolies. The banker cannot be on the golf course at three, having lent money at 6 per cent that he borrowed at 3 per cent.

    These days, bankers lend money at 3 per cent that they raised at near-zero, thanks to accommodating central banks, and have zero time to spend on the links. So does that make the Jenkins of the world outmoded – unable to navigate safely through the derivatives-infested waters of global finance?

    That has been the assumption until now, as investment bankers such as Bob Diamond of Barclays, Stuart Gulliver of HSBC and Stephen Hester of Royal Bank of Scotland have risen to the top of banks with trading divisions. Mr Jenkins has found himself in the right place at the right time – in the top ranks of a bank that needed a new face.

    In another era, he might not have made it. Solid, unpretentious, hard-working, dedicated are the sort of words people use to describe him. Charismatic is not. He lacks the star-power of present-day bankers such as Jamie Dimon of JPMorgan Chase, or historical figures such as Walter Wriston of Citibank.

    Yet there is no reason why Mr Jenkins should not succeed. For the challenge he faces, while seeming fiendishly complex and difficult, is essentially simple. The things he has to accomplish are obvious, there are no enormous obstacles in his way and he has plenty of time.

    Although it sounds technical, Mr Jenkins’ first act on taking office was significant – he ditched the return on equity target of Mr Diamond, his loquacious predecessor, who was doomed by the Libor-rigging scandal. Instead, his modest aim will merely be to make for his investors a decent margin over the bank’s cost of equity.

    Barclays, in other words, will aim to return to being a financial utility from its go-go years of global expansion. This leaves room for manoeuvre, reducing the pressures to leverage the bank’s balance sheet or to take on lending and trading risks for short-term profits.

    Although the SFO inquiry into its relationship with Qatar is unpredictable, he should be able to fix Barclays’ other scandals. The Libor-rigging affair has largely been settled, and the worst of the mis-selling of payment protection insurance on loans in the UK has probably emerged.

    Mr Diamond had such a torrid relationship with Barclays’ regulators that it will not be difficult to improve on it, especially given that the bank’s new chairman is Sir David Walker, a former Treasury official and City regulator, and a senior member of the City of London’s great and good.

    Mr Jenkins may find Sir David – a man of strong opinions expressed loudly – less amenable than Mr Diamond found Marcus Agius, the emollient former chairman of the bank. If he handles him tactfully, however, there is no reason why they cannot rub along.

    As for Barclays Capital, the investment bank that has become a headache, that problem may solve itself. Regulators are making it set aside more capital against trading, and the ringfencing of retail deposits forced on Barclays by the Vickers commission will make it costlier to fund its operations.

    Its size relative to the rest of Barclays is therefore likely to shrink naturally, along with the bonuses that Mr Diamond used not only to receive but to hand out. Mr Jenkins need not tussle with an expanding division like John Varley, the former chief executive, who had to share power with Mr Diamond.

    Indeed, if anything more goes wrong at Barclays Capital, Mr Jenkins could always sell it. For the moment, he insists that Barclays will remain a universal bank. It has broken up an investment bank before, however – the dismemberment of BZW in 1997 led to the creation of Barclays Capital. It could easily change its mind again.

    Above all, the best asset any bank chief executive has is timing. Those appointed at the bottom of the cycle, when everything is in a mess and the only way is up, tend to do well. Those appointed when economies are booming, and are about to suffer a crash, become victims.

    On this scale, Mr Jenkins is a lucky man. Not only does he have a nice background but he has been chosen at the right time. Although banks face more competition than before, high-street outfits such as Barclays are formidable franchises that can pump out profits for years before lending standards fall and they wander astray.

    Unlike the technology industry, in which companies face constant upheaval and change, banking is best done steadily and soberly, an approach that suits Mr Jenkins. The most important decision he will ever have to make – to put on the brakes when things are going well – is probably years away.

    We do not know if he will make a good leader for Barclays. But he stands a decent chance.