Renminbi strengthens further despite gains by dollar

The renminbi on track for a fourth day of firming against the dollar on Wednesday after China’s central bank once again pushed the currency’s trading band (marginally) stronger. The onshore exchange rate (CNY) for the reniminbi was 0.28 per cent stronger at Rmb6.8855 in afternoon trade, bringing it 0.53 per cent firmer since it last […]

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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 […]

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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 […]

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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 […]

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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, […]

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Categorized | Banks

Barclays: life in the old dog yet

Posted on November 30, 2016

Barclays, a former basket case of British banking, is beginning to look inspiringly mediocre. The bank has failed Bank of England stress tests less resoundingly than Royal Bank of Scotland. Investors believe its assets are worth only 10 per cent less than their book value, judging from the share price. Although Barclays’s legal team have a mountain of work in hand, little relates to recent alleged misdeeds.

Those incurable optimists on Threadneedle Street envisaged a severe world recession, a financial shock and, for all we know, plagues of locusts. Barclays undershot its main 7.8 per cent target for equity as a proportion of risk-weighted assets in the war games, even after projected dividend and coupon cuts. However, the bank would have weathered the apocalypse by half a percentage point after hybrid bonds converted to equity.

Despite the skinniness of that margin, the Old Lady did not require chief executive Jes Staley to rework his numbers, a process that might have raised the possibility of a cash call. He apparently got credit for an anticipated one percentage point increase in headline capital, currently 11.6 per cent, reflecting the sale of shares in Barclays Africa and a noncore asset rundown. Just as well. He got no credit at all for any ability to lift capital in a crisis through managerial ability.

These days, central bankers are immune to the charisma of Barclays bosses. The City, which is more impressionable, has warmed to Mr Staley. His vision of a bank and a credit card business serving corporate and retail clients on either side of the Atlantic has coherence. The shares have been lifted by enthusiasm for Wall Street banking following Donald Trump’s presidential win, pricing them at a substantial premium to former glamour stock Lloyds.

Most of the misconduct issues Barclays now enumerates at the back of results statement are of mature enough vintages to merit the title “legacy” too often applied to anything bank bosses feel embarrassed about. Analysts expect steady step-ups in profits over the next few years. With an investment bank in the mix, the real numbers will be volatile. But the mood around Barclays is better than it has been for years. Give the old dog a stroke. There’s life in him yet.