Barclays protects its bankers' pay
Barclays existing shareholders are not universally overjoyed at the deal it has struck with the Abu Dhabi and Qatar.
Apart from anything else, if Barclays had raised the capital from HM Treasury - from all of us as taxpayers - it would have sold the new shares at just above 189p per share (assuming that it could have had the capital on the same terms as Lloyds TSB).
Now that price of 189p is almost a quarter higher than the price which Qatar and Abu Dhabi is in effect paying for 1.8bn new Barclays shares (which they'll receive when the mandatorily convertible notes are converted into shares before June 30 next year).
For the avoidance of doubt, Qatar and Abu Dhabi are paying much less than what was on offer to Barclays from the Treasury, from taxpayers, just over a fortnight ago.
So the wealth of Barclays' existing shareholders has been eroded by the refusal of Barclays to take the money on offer from taxpayers.
And it's worth noting that the Treasury was not undermining the important pre-emption rights of existing shareholders in the way that the deal with Abu Dhabi and Qatar has done.
The Treasury was offering to underwrite the issue of new shares at 189p, but taxpayers would have had the ability to buy the lot at that price.
That's very different from what Barclays has announced today.
Its existing shareholders have only been given the right to buy a fraction of the new equity on offer.
Barclays' big investors (and only the big ones) can today purchase up to £1.5bn of the mandatorily convertible notes, which is the equivalent of buying new shares at 153.3p each. They have no ability to claw back the £2.8bn of these notes that have been sold to Qatar and Abu Dhabi at that low price.
And, as I said in my earlier note ("Why Barclays prefers Abu Dhabi to GB"), existing shareholders don't get even a crumb of the attractive warrants sold to Abu Dhabi and Qatar with the £3bn of reserve capital instruments (these warrants can be converted into 1.5bn new Barclays shares at any time in the next five years, at a conversion price of 197.8p).
What's more Barclays is paying a whacking coupon, loads of income, to Abu Dhabi and Qatar. They get 9.75% on the convertible notes, and 14% (oh so loverly, a time of falling interest rates) on the reserve capital instruments.
And the 14% coupon is tax deductible (and, before you ask, the coupon on the prefs being sold by HBOS, Lloyds TSB and RBS to the Treasury is not tax deductible).
That means we as British taxpayers are subsidising the payment to these oil-rich states to the tune of £120m per annum - which presumably won't please Alistair Darling at a time when tax revenues are too tight to mention.
Oh, and by the way, while Qatar and Abu Dhabi are receiving this fat income stream, Barclays' existing shareholders have been told they can't have a dividend for the second half of this year (bye bye to £2bn).
So, to re-state the bloomin' obvious, Barclays is paying an arm and a couple of legs for this money from Abu Dhabi and Qatar (with a little bit of a contribution from British taxpayers), when it could probably have paid just one arm and one leg for the money from the Treasury, from taxpayers.
Why has it been so desperate to avoid taking taxpayers' cash?
Well, it wants to avoid making itself vulnerable to being bossed around by the chancellor and prime minister - which it fears would have happened it had taken taxpayers' moolah.
But what's really at stake?
Is this about protecting its right and ability to pay many millions of pounds, even tens of millions, to its superstar bankers?
After all, Barclays - following its takeover of the US bits of bombed-out Lehman - is in some ways more investment bank, more Wall Street, than retail bank these days.
And, famously, Bob Diamond, the head of Barclays Capital - its investment banking arm - has received double figure millions in annual remuneration for some years now.
I've already been rung this morning by sore investors and bankers who allege that Barclays has tapped Abu Dhabi and Qatar because it doesn't want Gordon Brown and Darling putting a ceiling on what it can pay its top execs.
Barclays tells me that it is motivated by a desire to protect its commercial freedom, which is about more than how it rewards its stars, but also includes that cherished freedom.
I'm 
© MMIX~RS~q~RS~~RS~z~RS~58~RS~)
CommentsSign in
You need to sign in to contribute to this page. If you're new to BBC Blogs, creating your membership is quick and easy.
This desire to keep the remuneration rolling in at all costs just about sums up the whole problem, doesn't it?
Complain about this comment
That's Capitalism! We (small shareholders, tax payers, consumers) are getting the shaft, they (bosses) are getting the goldmine.
We all - government, taxpayers, institutions, shareholders should all vote with our feet and boycott this evil brood.
How about the government set up a retail only bank to handle the uncomplicated transactions that 95% of the populace needs?
Complain about this comment
If Barclays took the Queen's (many) shillings, will there be more when they need the extra liquidity ?? Those Middle Easterners have loads more to spare and it's all in good hard cash !! That, I believe, is the driving factor in their thinking.
It's not what they need now but what they may need in to coming turmoil in the financial sector !! Real money, not funny money that devalue even as you lay hands on them !!
Complain about this comment
At last, as announced in George Osborne?s speech at the London School of Economics, we at last have some idea where Tory economic policy is going. They now claim to believe, as belatedly does much of the world, in a general philosophy of Keynesianism. At the same time they have dramatically reversed their position (one they held just a few days ago in the brief era of bi-partisanship) of borrowing to buy our way out of recession; now claiming that is ?old-fashioned Keynesianism?.
But their new approach is a strange form of Keynesianism; especially delivered at LSE whose academics would presumably have registered the anomalies. Osborne seems to be narrowly defining it just as the use of automatic stabilisers, which most modern societies would implement as part of normal social policy; and without a thought of Lord Keynes, even in a recession. It appears that Osborne then consigns all the rest of Keynesianism to ?neo-Keynesianism?, which he seems to believe is a term of abuse.
Instead the rest of his solutions seem to hark back to Thatcher economics; in terms of interest rate control (the last remnant of monetarism), tax relief for small businesses and the middle classes, together with limits on government spending (monitored by an independent body).
Am I alone, however, in thinking that his lack of understanding of economics is demonstrated ? in front of LSE academics - by his idea as to what trickle-down theory is? As an economist myself I always thought it was the discredited idea that the wealth of the rich trickled-down to the poor. In the specific context of a depression, though, Keynes noted that money given to the rich was saved where that given directly to the poor was spent, thus helping us all spend our way out of depression. Osborne rather strangely thinks ?trickle-down? refers to government spending (typically on large scale projects) designed to boost the earnings of the poorer sections of society; especially those working in the hard hit construction industries.
Complain about this comment
Hard to see the benefit for anyone - except for the board's bonuses. Why is it better to be bound to middle eastern governments than the UK government? Plus - of course - they'll not a get a second chance to get UK support, when it all goes belly-up. Which it will.
Complain about this comment
Given Gordon Browns ability to change rules whenever he feels like it I'm not surprised that Barclays have decided to keep clear of Government money. Freedom from Labour meddling may seem expensive now but given the level of national debt who knows what is round the corner.
Complain about this comment
And if the deal goes bad, the government will bail out the bank with it's new Abu Dhabi shareholders. Taking the Piss!!
Complain about this comment
Sorry bit this is disgraceful.
I'm not generally one for laying into bankers to anything like the degree regularly seen on here and I'm passing no judgement on salaries and bonuses but this is bascially riding rough shod over existing investors.
In some ways I'm pleased that the governments stake in banks is lower than it would otherwise have been but it's immoral (and I'm surprised not illegal) for Barclays management to actively seek out a lower offer for personal reasons to the detriment of it's shareholders.
Complain about this comment
It is inevitable that commercial and investment banking activities will have to be separated once again in both London and New York.
Barclays will have chose which one to be. Expect the commercial banking part to be sold off / nationalised and the investment bank part to be heavily regulated.
In this process the weakness of the true state of their balance sheet will be revealed. The shareholders will take a beating.
If one or the other fails they will not get bailed out.
Complain about this comment
So - let Barclay customers vote with their feet if they don't like this.
Complain about this comment
That is a great report, thank you !
Plenty of food for thought in the chilling prospect of our major banks coming under control of foreign governments!
Is Britain bankrupt ?
Complain about this comment
The next bank to teeter. LET IT BURN.
Complain about this comment
It also strikes me that the reputations of the Barclays CEO and Chairman had been staked on sourcing non UK government equity. At the time they turned their noses up at the Government offer surely they were thinking that they could get funding on more advantageous terms elsewhere?
However, as events have unravelled, this is obviously not the result, therefore the Directors have agreed to take this money so that they can maintain both their jobs and bonuses. No wonder the share price has fallen heavily today
How can non executives/corporate governance bodies allow this to transpire? Where are the checks and balances? As a Barclays shareholder I am appalled, that they allow such a blatant action of self interest to happen, particularly in light of how we got here in the first place
Complain about this comment
Seems a high price to pay for freedom from the British Government bossing them around
Do they know something we dont
Complain about this comment
I agree with everything said here, and what of Barclay's individual, small shareholders who were promised participation in a future issue and are suddenly left watching the drama from the sidelines.
Complain about this comment
Well done Pesto - you've finally caught on. See my comment '39' to your earlier mistaken post.
Complain about this comment
I am astounded at the abuse of existing shareholders, particularly small shareholders.
How can these greedy self-serving directors, who are tantamount to assisting theft from exisitng shareholders, get away with denying existing shareholders their pre-emptive rights?
How can they offer shares at 152.5p to mainly middle eastern investors when the Government would have paid 189p and honoured per-emptive rights?
As a small shareholder, despite holding my shares in a Barclays Shareholders nominee account which makes it more difficult to vote on these things, I will be most certainly voting against this deal.
If the guardians of our pension funds can raise their lazy selves into action they also ought to make sure this deal is voted against.
I thought the Government stealing a large part of our banks was bad enough, particularly having voted Labour (never again) and not believing the old sayings about Labour Governments - but to see directors effectively assisting the theft by Arab investors so that they can continue to pay themselves unfettered sums is truly amazing.
The Government is also partly to blame in not regulating against such abuse of existing shareholders-but how can the pot call the kettle black?.
Complain about this comment
Yes, maximum commercial flexibility all round ! (And why wouldn't they ?)
Complain about this comment
Yes - RP has hit the nail on the head. Barclays management avoided government money precisely so that they could continue paying themselves huge bonuses. Shareholders' interests didn't even enter into it.
Complain about this comment
Robert Peston is absolutely right. Barclays management simply want to perpetuate the bogus bonus culture at any cost. If they were serious about remaing independent they would not pay any bonuses for this year. The heavy dilution, servicing costs will severely restrict the scope for dividends, and management will ensure their huge rewards package comes first. Sell Barclays!
Complain about this comment
As a small shareholder in Barclays I should be unhappy at this deal. The reason I am not is that I'm more happy that Barclays have managed to avoid the disgusting blackmail tactics of the Gov't during the negotiations of the re-capitalisation of the banks. The enforced increase in capital ratios at a time when exactly the opposite should be happening to allow the banks to loan more money was a very dirty trick to play at time of unprecedented liquidity freeze. I can see Gordon Brown's smugness as he thinks he has beed able to nationalise these bastions of capitalism with overwhelming public approval. I see through this charade and so have Barclays.
The capital ratios should have been increased during the boom years to restrict the too rapid expansion of the money supply this is a failure of macro economic policy by the government, not now at a time of de-leveraging and rapid money supply contraction which only compounds the problem.
In public Brown calls for 'the banks' to maintain lending at the same level as 2007, yet the bank that is fully nationalised and therefore 100% owned by the government has been the worst bank with respect to reducing it's willingness lend, more than any other bank!! Thousands of people with Northern Rock mortgages were told within weeks of it being nationalised to bugger off and get a mortgage somewhere else. They have also been the bank which has been the most aggressive on re-possesions which in turn both increases the crash in house prices and undermines confidence in wholesale money markets to invest in UK assets. How can Brown expect other banks to do this when his bank (and i'll bet this is how he really sees it) wouldn't lend a fiver against the collateral of Buckingham Palace!
This is either incompetance on a mesmerising scale or perhaps a very clever political game of chess being played out. Is this the beginning of the next global war, Socialism versus Capatilism.
Complain about this comment
At the beginning of all of this turmoil, the one bank many journalists would have wished to disappear would have been Barclays. Robert, I get the impression that you cannot bear the idea of Barclays coming out of this trauma as one of the few winners.
Complain about this comment
I'm back on home soil.
The good news is that everything looks normal.
'One in five employers said they would take advantage of the rules which allow them to make workers aged over 65 redundant, without having to provide a business reason'.
Come on Liz, sack the lot.
No potato pun intended !!
Telegram from Mum.
Barclays bank owned by arabs - stop - Manchester owned by arabs - stop -
Where will it stop - stop
Stopped for lunch on M 40, hope to find English menu.
Complain about this comment
Robert
I think you have omitted the following in your blog:
Brown and Darling have been completely outflanked, outwitted and outthought by the Barclays group.
When small fish leave the small pond to swim in the ocean, they have to be able to deal with the great white sharks or they have to face the consequences.
Although Barclays is British, I have felt for some years that their outlook is more global. I would not be surprised in the near future if they cease to be quoted on the London Stock Exchange and move abroad. Whether others will follow....
Complain about this comment
well with so many of our banks owned by overseas investors, banks or may be states its expected that barclays would broker there own deal due in a great part to there misstrust of the government here.
there has to be something they have not released that makes there deal worth there while?
thus we can only speculate upon what ever that is they themselves are smug in there ivory towers rubbing there hands with glee.
are they right well time will tell and to be honest to many british banks have fallen under dodgy european bamks ownership recently and this governments handling of the situation has been half hearted at best, with too many clauses.
at least if barclays fails now if this downturn gets worse they wont be taking british taxpayers money with them unlike several others.
Complain about this comment
What's at stake?
How about we arrest the lot of them - GB, AD, all of the execs of Barclays and anyone else we can think of - and charge them all with conspiracy to defraud the Crown.
That'll sort the men from the boys. He who squeals first wins....
Complain about this comment
So, is Barclays to be re-named "AL-BARCLAIS".
Complain about this comment
Surely if it can be shown that the Barclays Board has taken on more expensive capital and thereby hurt its shareholders in order to protect their massive remuneration, then they have broken their fiduciary duty?
If I were a large Barclays shareholder I'd be looking at legal options to try to prevent this deal...
Complain about this comment
Does Barclays find the commercial shackles proposed by the Treasury for taxpayer funding too limiting, and in particular the pressure to lend for political reasons unappetising. As I understand it Barclays are the only high street bank to be already offering the EU finance facility for small businesses so they are ahead of the pack on that score. If Barclays find the taxpayers money has too many strings and goes elsewhere that is a good thing surely, one less headache. I can't see how one minute the banks are being moaned at for failing to find private funding and asking for taxpayer money, but when they go and get private funding they get moaned at for that. Can't have it both ways. It is up to the shareholders to control exec pay.
Complain about this comment
I think Barclays are very wise to avoid any dealings with HMG. It is difficult to overstate the damage that can (will?) be done by incompetent meddling in Bank's affairs by the unqualified rank amateurs that run this country.
I for one am very, very pleased that Barclay's and HSBC have avoided the tar-pit of part nationalisation. Over the coming years, I am quite certain that these two will vastly outperform the rest.
Complain about this comment
The greed of the Barclays directors is truely breathtaking (let alone their lack of patriotism)......I for one certainly hope they are wiped out by the impending CDS tsunami.
Complain about this comment
RP,
Do you honestly believe the nonsense you've just written? I mean the bit about UK taxpayers subsidising the Abu Dhabi and Qatari investment funds?
To save you the trouble, I'll correct your factual inaccuracies. The interest expense of paying this money to AD and Qatari investors is tax deductible to Barclays. They get the tax benefit not the investors. Therefore the beneficiaries of this tax deductibility are actually existing ordinary shareholders of Barclays. Why? Let's say Ally D decides to rush legislation through Parliament to remove your "subsidy". That would have no impact on the AD and Qatari investors: they would receive the same interest income. However, Barclays would end up with lower costs allowed versus tax, therefore their tax bill would rise. That means lower after tax profit attributable to ordinary shareholders. Barclays would respond in one of two ways: increase the interest rate charged to borrowers (eg small businesses, mortgages) in order to earn the same after tax return, or simply withdraw from the business as it's unattractive.
Incidentally, why not acknowledge that the tax-deductibility of interest expense is common to all forms of borrowing, across all borrowers? So, for instance, small businesses can deduct their interest expense. Are you saying that the government should scrap the allowability of interst expense generally, or do you just have something against foreigners? Or banks? Or banks that don't have HMG as a shareholder?
Why don't you also point out that existing shareholders have a number of remedies if they're unhappy about the likes of Bob Diamond getting big remuneration packages? Isn't BD a main Board Director of Barclays? I'm pretty sure he is. So existing shareholders can vote down the Remuneration Report at the next AGM. They can also vote against Director reappointments at the AGM, in particular any of those due for re-election who are members of the Remuneration Committee. You might like to go for a bit of balance and point out how highly rated BD is by Barclays institutional investors. There hasn't been much objection to his earnings as he expanded BarCap at considerable benefit to the shareholders until recent events. Has BarCap fared better or worse than most other investment banks in the current crisis?
Finally, why don't you point out that the reason why Barclays cancelled its ordinary dividend was to help repair its capital base. Oh, and acknowledge that the nationalised banks have lobbied to have the "no divis" condition of HMG's investment removed. Barclays shows no sign of changing their stance on the next dividend.
You might also like to enlighten readers as to how these capital injections normally work, ie private sounding out of investors (current ones or not) to establish the level of interest, required terms, explanation of the business strategy etc. It has been obvious since the HMG bailout was announced that Barclays was desperate to avoid having to tap it. And, yes, the reason is to avoid limits on executive payments that could compromise its Lehman's acquisition.
The deal Barclays got on that was (almost literally) a steal. They don't want to lose it and, clearly, the AD and Qatari Funds are willing to invest, but at a price. You might like to find out why others weren't willing (or able) to invest. For instance, you could ask your mates GB and Ally D if they'd have been OK with Barclays taking HMG money, going ahead with their Lehman's acquisition including the need to pay bonuses previously agreed prior to Lehman's insolvency. If they're not happy to sanction that, then why would it make any sense for Barclays' existing shareholders to see a significant holding by a shareholder fundamentally opposed to the management's declared strategy? And why, if Barclays can get funding at a price they think still allows them to earn a decent return, would it make sense for barclays to ditch their chosen strategy just to get HMG funding? HMG funding may well be cheaper, but if the marginal reduction of returns exceeds the marginal reduction in cost of capital, then it's not in Barclays' interests to ditch their investment banking ambition in return for lower capital costs via HMG.
I normally like RP's blogs. They stimulate debate which is the idea. This one is rubbish, though. It's overly populist and factually wrong as a result.
Complain about this comment
Surely it should be totally obvious to everyone by now that the banks are totally unable to control their own greed, regardless of the devastating effects it has on society, regardless of how bad things are getting.
It's a near-inevitable side-effect of competing in our monetarist global economy, and I doubt any company is immune. Just look at Enron, or Halliburton, or Monsanto, or Nestle, or... well... any of them.
Isn't it time now for money -- the most vital and fundamental building block of society -- to be a government function?
OK, that means giving a lot more power over society back to the government, and perhaps that's risky -- but at least that power would be out of the hands of people who we KNOW will misuse it.
Complain about this comment
So, they're selling shares to Middle East investors at 153.3 p instead of selling to HMG at 189p, and all that existing shareholders get out of it is a bank that is free to go on paying bonuses? Crazy, on the face of it.
I doubt if it's this simple but, if it is, then aren't their rules to stop this sort of thing?
Specifically, is a company allowed to issue this much new equity without offering equivalent terms to existing shareholders?
Aren't they obliged to take the best offer (i.e. HMG's 189p)?
Don't they have to hold an EGM to get shareholder consent for this sort of thing?
I'd be grateful if someone could clarify this. It looks a lousy deal for existing shareholders on the face of it.
Complain about this comment
So, let me get this straight. This is not a good deal for shareholders. However, it does mean that Barclays keeps the right to pay its senior executives eye-wateringly large bonuses, which would have been restricted if they'd taken government money.
This decision, which apparently is not good for shareholders, but is definitely very good for senior executives, was taken by the senior executives, who are supposed to act on behalf of the shareholders.
Am I missing something, or is this about as clear cut a case of conflict of interest as you are ever likely to see in corporate finance?
Complain about this comment
Recommendation: - Due Diligence.
If I was contemplating such an investment (i should be so lucky!) and getting such a large risk premium I would be very worried about why, particularly when they could have had funds at lower rates. I do not accept the bosses pay argument.
To look at the books and records very closely indeed, would be my first reaction - questions that come immediately to mind include the nature of the assumptions in the marking-to-market of the assets and liabilities on the books.
I guess this thought is shared in the market and that is why the price had dropped, when you might have expected it to rise.
Complain about this comment
To anyone who still thinks this is a good idea take a look at Barclays share price movement since 09.00 this morning. The market knows a shareholder shafting when it smells one.
Complain about this comment
Amid the discussion about the British banks there is little if any reference to the third largest - Standard Chartered - also noted for not having indulged in a diet of toxic derivatives and greed driven lending (and not at the door of Downing Street with the begging bowl). My recollection is that both Standard Chartered and Barclays have one of the Singapore investment companies, Temasek, as major (15%+) investors. What I wonder do they feel about seeing their investment eroded by their middle east counterparts, or have they with typical Singaporean discretion quietly made their own arrangements with Barclays without shouting about it?
Complain about this comment
Of course it makes sense!
The middle-eastern investors are not likely to ask Barclays to make populist decisions such as providing cheap mortgages, etc. Any normal investor would be better than the politically-motivated Treasury....
When the crisis ends (and it will take some time, of that I have no doubt), Barclays will be stronger than its treasury-funded rivals because it is independent to make its own business decisions.
Complain about this comment
This shows the true colours of the Barclays executive and unfortunatley probably all successful bankers. Their objective is to make as much money as they can with 'charity begins at home' the main priority. The ability to securely hold peoples savings and handle every day finances are an essential part of daily life as is water electricity etc. Making obscene profits from this is totally immoral. Only by closing these institues down and replacing them with a totally regulated non-competitve single 'National Bank for the UK' can a solution be found. If there's no competition there is no argument for big pay big bonuses and shameful policies.
Complain about this comment
Pheeewee Robert. Have these greedy 'bleep' learnt nothing. It looks sooooo bad for them. It just shows you how these bankers feel no shame at all. They're even willing to do the dirty on their own shareholders. What a scandal. What a bunch. Surely they're expected to act in the interest of their shareholders? Or is that an old fashioned concept these days?
Complain about this comment
This comment was removed because the moderators found it broke the House Rules.
Never liked Barclays - they are ruthless greedy, bully cowboys. Now they are doing their turn on the Arab states and at others expense.
Complain about this comment
"Why has it [Barclays] been so desperate to avoid taking taxpayers' cash?
Well, it wants to avoid making itself vulnerable to being bossed around by the chancellor and prime minister - which it fears would have happened it had taken taxpayers' moolah.
But what's really at stake?"
Which you then spend 4 paragraphs condensing into an assertion that executive remuneration is the only possible reason for Barclays' reluctance to accept Treasury funding.
Does it ever cross your mind that some of your truth structure may actually be no more than expedient assumption? Maybe you have invested so much of yourself in Brown's right to determine the way through this that you are not prepared to accept that anyone who disputes this can possibly be acting rationally.
Maybe it's you who is not acting rationally.
Complain about this comment
RE: 21 That's exactly the action Barclays has been taking against it's customers at every turn since things went pear shaped so don't get too stroppy with the Govt.
I think this shows the lengths Barclays will go to to avoid any imposed responsibility for fairness to its customers. Barclays likes to be a law unto itself and taking government cash would cause difficulties in achieving that end.
Complain about this comment
In a perverse sense, this is ironically amusing. If you ever wanted a snapshot of what was wrong with the banking industry this has got to be it.
Print it out and frame it. In ten or fifteeen years when it all collapses again you can look up at it hanging on the wall, shake your head and mutter to yourself "I told you so.".
Again.
Complain about this comment
The reason this is happening and why more solvent banks will be targeted is set out below
The Gulf has massive infrastructure projects under way designed to diversify its economic away from relying on oil export revenues. Many of these projects are public-private partnerships, but private investors are finding it difficult during the global credit crunch to access abundant and cheap funds.
As a result the shareholders can be pretty sure their loaned funds will not be defaulted on which cannot be said for Britain or the USA
Complain about this comment
As an ex-employee of Barclays i've avoided dealing with them at all possible times.
It's a shame as Woolwich was a great firm with some great deals. Even though this brand still gives some great deals i can't bring myself to use them now they are part of the Barclays brand
Complain about this comment
Also didn't Barclays recently acquire a part of Lehman's? They found the money for that easil enough
Complain about this comment
"The UAE will employ all means to head off the global financial crisis, be it through bilateral cooperation with the country's friends and allies or through international financial institutions," Shaikh Abdullah told a joint press conference with his German counterpart Frank Walter Steinmeier in Abu Dhabi.
courtesy Gulf news, yesterday
Complain about this comment
It looks as though the senior management at Barclays are more concerned with preserving their massive pay packets than they are at protecting the rights of existing shareholders.
I have long believed that shareholders exercise far too little influence over the boards of companies. This was a point made quite forcefully by the Hedge Fund manager Hugh Hendry in a recent episode of Dispatches on Channel 4. The plain fact is that although in theory a company like Barclays should be run in the best interests of its shareholders, in practice many of the decisions, particularly with regard to remuneration, appear to be motivated by the self-interest of the senior management. In effect, senior managers run these companies as if they own them.
I?m not sure what the answer is. Somehow, the various shareholders - pension funds, investment managers and the like, need to get together to exercise a greater degree of control over the companies in which they have a stake.
Complain about this comment
"The UAE will employ all means to head off the global financial crisis, be it through bilateral cooperation with the country's friends and allies or through international financial institutions," Shaikh Abdullah told a joint press conference with his German counterpart Frank Walter Steinmeier in Abu Dhabi.
courtesy Gulf news, yesterday
Complain about this comment
"The UAE will employ all means to head off the global financial crisis, be it through bilateral cooperation with the country's friends and allies or through international financial institutions," Shaikh Abdullah told a joint press conference with his German counterpart Frank Walter Steinmeier in Abu Dhabi.
courtesy Gulf news, yesterday
Complain about this comment
Well done Barclays.
I'd pay almost any price to keep Gordon Brown and Alastair Darling from meddling in my business, or (worse still) the dead-hand of the 9 to 5 civil servant which may well follow the nationalisation of other banks.
Government ownership of banks will be as disasterous for banking in the UK as it was for steel, coal and cars, but with even more serious consequnces for the wider economy
Complain about this comment
The answer simply put is that Barclays' board had no desire to be nobbled by the Standard Chartered "rescue" plan.
Complain about this comment
Ah - the blessed know everything Robert - with all of his years' experience of running a financial institution - not!
Did it ever cross your mind that there could well be more to this transaction than the visible investment?
The gulf states have a lot of disposable wealth, maybe they want someone to manage it for them - maybe a bank they have a stake in.
Barclay's could well be playing a very canny long game - but then that is not such a good story is it - and probably not the story written for Robert by the Treasury
Complain about this comment
JayPee28bpr
Excellent post. I have only recently cottoned on to your posts, but you're obviously working in the industry and know what you're talking about.
As regards the press, it has often amused me that if you have any inside knowledge of a story you will invariably see factual errors in even the most "respected" press reports.
Complain about this comment
Wee-scamp, this is about shareholders not customers ? who as RP demonstrates are being penalised by this move. I thought a board was under a legal obligation to act in the interests of all shareholders.
Complain about this comment
As a taxpayer, Iam glad that Iam not picking up the bill this time
Complain about this comment
To me, this blog/article sounded as though it was actually Alistair Darling having a whinge about not being able to get his claws into Barclays, rather than an unbiased article on the BBC.
I'm not a big fan of Barclays - I would never bank there myself now after past experiences - but I'm glad at least one of the banks isn't held in thrall to the Treasury.
Given Labour's handling of the economy, the thought that they could also have had significant influence over all the major banks is more frightening than the amount that bankers get paid.
As for paying two arms and two legs for this deal, for their shareholders it will hopefully mean they get their four prosthetic limbs sooner than they would have received two if the Treasury had taken a stake in the company.
Complain about this comment
Nice piece of analysis Robert.
Which makes it plain that these bankers are continuing to do what they have done to such an excessive degree over the last few years..... run their banks in the interests of themselves (directors and senior executives) and not, as they should be doing, in the interests of their shareholders.
You could say, though, that Barclays shareholders are a cowered, sensitive, delicate lot at the moment, who have little appetite for expressing strong views in all this, because they realise that their shares are only worth anything at all because of the government guarantees that have been handed out.
One question - Barclays may have avoided calling on the government for share capital, but it is still using the two other elements of the government package, so what is the government getting/ do we as taxpayers get in return for this help?
Complain about this comment
i'd like to know how the cost of capital compares after taking account of the tax deductibility.
despite the comment from JayPee28bpr @ 31, i do still get the sense that, even after taking account of the deductibility and the impact on the lehman acquisition, this is a worse deal for existing shareholders than the bailout, if only for the simple reason that current shareholders are not being offered the right to participate on equal terms. (nb, i believe robert's 7th para was supposed to read "The Treasury was offering to underwrite the issue of new shares at 189p, but EXISTING SHAREHOLDERS would have had the ability to buy the lot at that price.")
although robert does sometimes get his facts wrong, he clearly has been getting a lot of angry calls from barclays shareholders and i suspect that he has the "feel" of the story about right.
Complain about this comment
#4 mercerdavids
Great post! I think you are right about this 'trickle down' nonsense: it needs to trickle up (as it were) by stimulating economic activity at the bottom end of society.
I don't know what Osbourne is going on about. He slates Broon and Darling for spending our way out of trouble; and then promotes the idea of tax cutting our way out of trouble! Eh?
Do they really think freezing council tax and reducing employer contributions is going to do much?
How long did it take the Tories to dream this one up? If they were in government the economy would have collapsed weeks ago while they figure out who to 'target' these tax cuts to.
Complain about this comment
This makes perfect sense to me. Good for Barclays looking towards the long-term bigger picture and not at the very short term cost. I am a Barclays shareholder and I think this is very good news.
Complain about this comment
i like everyone else am appalled with banks behaviour regarding bonuses e.t.c. i think not enough credit it is being given to the Barcalys board here surely there not stupid enough to take a worse deal just to keep there bonuses and freedom e.t.c. i think there is a much more worrying aspect here and that is her majestys goverment in a bit of a pickle. The Banks have no money, the goverment is up to its eyeballs in debt, Countrys are now running into trouble and the IMF are down to there last few billion. With everyone calling in loans and debts that simply can't be paid is the whole system coming down in a domino effect!!! i'm a little worried that barcalys know something we don't! i think it might now be time to stock up on some tinned foods
Complain about this comment
BTW I thought banks were not allowed to be retail banks and investment banks anymore, or is that a US thing?
Complain about this comment
Perhaps someone can explain how Barclays can afford to pay such high returns to their new Arab investors? Couldn't they have obtained funds at a cheaper price from say the British pension funds?
Doesn't this deal mean increasing the interest rates Barclays charge to customers at a time when everyone expects the bank rate to fall in the next year? Or is it the case that interest rates are no longer related to the bank rate?
One thing looks very clear. It is a lousy deal for small shareholders. The share price has tumbled today on the news.
I hope that the refusal of Barclays to accept HM Treasury help means that, if Barclays runs into further trouble, HM Treasury will extract a much higher price for help than charged to the other banks that have accepted help.
If I still had an account with Barclays, I would close my account on this news. I'm glad I'm now with the building society, Nationwide which is owned by the members.
Complain about this comment
Unbelievably arrogant. The more I learn about the banking industry, the more I am physically repulsed by their behaviour.
The whole process of this financial meltdown is akin to turning over a rotting corpse and finding the nest of leeches attached beneath, feasting on the foul dregs, not missing a drop.
Are we so stupid that we trust the these parasites with the control of our money supply and the economic health of our nation?
Vile.
Complain about this comment
Isn't this a bit like telling Ocado they could get their groceries cheaper from Somerfield or Lidl?
Complain about this comment
I have read some articles - but one criticising a private sector company for not taking taxpayers (our) cash is beyond belief.
Is the Treasury so upset that a bank could raise the money elsewhere? And why is the BBC not quoting these concerns directly?
And not forgetting Barclays' shareholders have their own rights which are enforceable in law.
Complain about this comment
What this decision shows is that Barclays did not want the Government to get its hands on its books. The question, given the fact that this deal is a seemingly worse deal financially for the Bank and, more importantly its shareholders, is why?
The answer I fear is two-fold.
The first is the obvious, i.e. it did not want its business model effectively disbanded by nationalization - there is no such thing as part-nationalized, once government is in, 'freedom' to act independently is withdrawn no matter how little the stake.
However, the second is more concerning, i.e. that the bank did not want to expose the true extent of its toxic debt, which given they have admitted that credit default swaps is a least £2.4t, it would have had to do under nationalization, and instead has fished around to find others more willing to keep the situation under wraps in return for a hefty return.
The concern therefore is that their situation is thus even worse than they are prepared to admit.
Anyone who believes that this crisis has bottomed out is, sadly, deluding themselves. We are only just beginning. I remain convinced that the system is beyond repair and all that is going on is a series of sticking-plaster solutions, which will unravel in due course.
Brown the saviour of the economy? Think again!
Complain about this comment
Robert,
I think you got this one wrong. I think Barclays is looking ahead to where it can do business in the longer term. I think they also can see a real problem for UK banks raising money through normal channels in future. I also have some sympathy with your correspondents who talk about the Government pushing banks to lend to bad risks- although the paradox is that they lent enough to entities where they had no clue of the risk. I applaud what HMG have done but do not blame the banks if they can get out of this mess without HMG money. What I do not approve of is the idea that banks should lend to businesses because they are small rather than because they are a good risk.
Where I think Barclays are a disgrace is in foregoing the dividend if they have made money and not accepting that they need to change the basis of remuneration of their senior people. But it is up to their depositors to make a judgement and take their money elsewhere if they object to it. Unfortunaely their shareholders have been shafted enough already and borrowers are hardly likely to take their business elsewhere in the current climate. Interestingly Barclays were the worse bank for shafting their customers in the 80s and 90s- so the nasty devils have not really changed their spots.
Complain about this comment
It means they can attract the best talent now that there competitors are constrained by government. Barclays will not have to be prudent bankers! If they ever were.
Complain about this comment
Meanwhile..
beyond the brief flicker of the candle of publicity and well-hidden from public gaze, ordinary peoples' lives are being wrecked by the recession - unless I'm dreaming and it's over already.
Funny how the BBC is going to treat all this. 'Same as last time, 1990-92 and beyond'. Plus ca change. Not news anymore, even little bigmouth Jonathan Ross is bigger than the recession 'story'..
So, in closing:
People are going to suffer.
There are going to be a lot of redundancies. A lot of people are going to go bankrupt.
A lot of firms are going to go under.
A lot houses will get repossessed.
De facto.
The end. Good afternoon, good evening and - Goodnight.
Nice one BBC. Clinch those headlines. Lord knows, you'll need the ratings more than ever now.
GC
Complain about this comment
63. At 1:55pm on 31 Oct 2008, dceilar wrote:
''I don't know what Osbourne is going on about. He slates Broon and Darling for spending our way out of trouble; and then promotes the idea of tax cutting our way out of trouble! Eh?''
May I explain, although I feel I will get short shrift.
1.Taxes should be reduced to enable all to either buy or save. The choice is theres.
2.Borrowing should remain as it is now - virtually impossible
3. Profits of over a reasonable percentage(set at figure above interest rate that still makes it viable to invest), should be windfall taxed
4. People earning over 50k pa should be taxed at at least double the current rate
5. Home Loans should be fixed for the length of the mortgage and nobody should be able to borrow more than 3 X earnings
The result would be people at the bottom would have the ability to purchase without credit or save.
Companies would be paying into society, investors could still get a healthy return
The economy would expand bottom up, social responsibility would come to the forefront of companies and communities
The higher earners would contribute a fairer share of wealth toward community instead of sitting behind their wrought Iron fences patrolled by guard dogs
When you ask the questions:
Why should we pay bills to water, electricity and gas that produce the billions of profit for these companies shareholders with a small percentage going to towards regeneration?
Is it not a statement of our society that our basic needs are used to make money instead of support life?
If inflation is 5% and interest pays 6%, why are legal companies allowed to charge 30+% interest to the most vulnerable
Why do we have to pay PAYE taxes and NI straight form our salaries when the richest people in society pay nothing?
The system supports greed, encourages greed and kills dead social awareness.
Complain about this comment
It seems to me that the board members are more interested in protecting their high salaries or perhaps protecting their current positions. Who was in the driving seat when these banks got into trouble. Also it seems that often the increases in salaries are paid for by the reduction in salaries of other workers. Quite often we hear announcements of employees being made redundant and then not long after senior posts are rewarded with increased bonus payments or increases in salaries. Personally I feel sad for our young people coming into the work place today as we have not educated them for the modern world. I was interested to learn that in Germany they still have the apprenticeship schemes and they recognise that people have different skill some are practical and others academic. Lets wake up UK and think about our future and rebuild again not import everything.
Complain about this comment
So, short selling Barclays shares is illegal, but short-changeing Barclays shareholders is OK ?
Complain about this comment
If Barclays can raise the required capital without Government support, that is understandable and even commendable. However, as you point out, the motives may not be honorable!
Since Barclays has cut its dividend etc. to build capital, at the Shareholders' expense, the shareholder should reasonably be expecting the bank to overhaul its remuneration policies to reflect accountability and share the burden. So it remains to be seen whether or not management will accept any accountability/responsibility. History of Barclays would appear to justify some skepticism that this will happen. However the retail customer will continue to 'make sacrifices' through outrageous charges for very average services.
Complain about this comment
Now it seems not only Lloyds HBOS will be a much stronger position as stated in my previouse posting, RBS is better positioned to recover much faster and come out eventually strong growth and better div for its share holders as the bailout terms will curb the excessive executive payment and unnecessary risk taking. After all the worries of treasury bailout plan, these three banks HBOS, LLoyds and RBS will be now in a bullet proof case to march on to be the next stable, profitable and reasonable high street banks of UK. The next thing will happen to Barclays is really unpredicatable.
Complain about this comment
#57
Glad you like the posts. I'm actually a consultant, which many will regard as the same degree of evil as a short seller I suspect! I've held senior positions in financial services businesses previously, though. These were mainly in fund management companies.
For what it's worth, I've long held the view that financial services generally adds no value at all to society, and happily acknowledge that those of us in the industry, by contrast, are rewarded extremely well. So I don't approach blogs like RP's from any kind of apologetic perspective. I just think they should be factually accurate if people are to make informed contributions to the debate on how financial institutions should be regulated in future. And that's a very legitimate debate for everyone to be involved in.
Criticism of bankers, governments and, to a lesser extent, regulators, is perfectly justified. However, there is a lack of knowledge of banking and fund management generally displayed in replies to these blogs. That's not a criticism of the commentators. As an industry, we've been poor at explaining the products we sell and what we seek to achieve for investors. "Hedge Funds" are a great example. Blogs over recent weeks would suggest that "Hedge Funds" and "Short Sellers" are one and the same thing. The assumption is that they are hugely risky. In fact, most Hedge Fund investors use them to reduce overall risk. Most Hedge Funds do not take short positions. In fact a large proportion of them don't even invest in equities.
I hope we'll see a push to educate people a bit better on financial services. If we get this as a result of this crisis, then at least some good will have come out of it. It does require outfits like the Beeb to take part, and as part of this to put out accurate stories, though. Note I said accurate, I don't believe they need to be balanced. In this instance, I just think the reporting was plain inaccurate. We need to avoid that if everyone is to be enabled to make an informed contribution to the future of financial services.
Complain about this comment
"73. At 2:50pm on 31 Oct 2008, Ralphbab wrote:
It means they can attract the best talent now that there competitors are constrained by government."
Is this a joke? All the "best talent" that brought our banks to the brink of bankruptcy? In any rational economy, these clowns would never work again. In this lunatic asylum economy, of course, the old boys' network will ensure that they all land on their feet, ready to do the whole thing all over again. Must be nice to be so "talented".
Complain about this comment
It seems to me this deal only protecting the super bonus payment of the super bankers but very bad deal to the small shareholders comparing what the treasury offered. Now the Lloyds share price £2.02 is the proof that HBOS, Lloyds and RBS will be in a better position to progress, it's now better to switch to buy RBS share at 68pence that means one Barclays share at the current price can still buy 2.5 RBS shares.
Complain about this comment
Did the Treasury offer funds to Barclays if needed?
Or is Barclays a risky proposition and heavily geared, and taxpayers are better off out of there?
Do Taxpayers want to invest in Barclays if this is the way they behave?
Just seems there is perhaps a little more to this than meets the eye at present.
Complain about this comment
I note HarpendenAL5 #64, who is a Barclays shareholder, considers this story to be very good news.
The market thinks otherwise. The price as I write is 170p, down 35p on the day (a fall of over 17%).
In contrast, LloydsTSB and HBOS shares prices rose today.
Complain about this comment
Sorry to spoil the party, quick question.
One big business scoop after another. A kind of financial-times-ice cream party.
You RP are the not the business editor you is the BIG business editor.
Is there a SMALL business editor on this BBC site?
I only ask because whilst many must find these BIG BUSINESS blog topics absolutely rivetting there is a limit to how many of them I can read without throwing up.
GC
Complain about this comment
I am with #34 (Friendlycard)---don't Barclays Shareholder agreement or Mems. and Arts. have anything to say on rules and procedures for dilutive capital raising.
The shareholders are supposedly the owners of the company and it seems very strange that managers can dream up a scheme and simply impose it on them.
There is mention of large investors being offered buy-in and perhaps behind the scenes there have been soundings that enough large shareholders can be brought in by this offer---but I would still have thought it had to go to an EGM?
Of course the total disregard of shareholders shown by HMG from Northern Rock to Bradford and Bingley... as well as HBOS , and even Lloyds TSB; seems to set a climate in which shareholders are seen as somehow totally disenfranchised in this war---- perhaps Barclays feel they can simply take cover in the smoke shrouding the battlefield?
Complain about this comment
Maybe they don't want tax payer money because they don't trust brown.
I don't trust him - do you?
Can you just run through his 'golden rule' again - but include all his 'off balance sheet' borrowing (the type of practice he now claims to abhore when performed by the banks...).
Actually it isn't quite true that I don't trust brown, I do trust him to mislead, lie, destroy and general jynx everything he comes in to contact with...
Vinces line -- if abu-dabi can get 17% why the heck is brown only getting 12% from the other banks??!!
More brown incompetence costing the tax payer money.
Complain about this comment
86 e2toe4:
Thanks; I'm sure there must be rules about dilution, about a requirement to take the best price offered, and about the right of shareholders to stop this in an EGM.
More broadly, posters here seem to fall into two categories.
One group think that Barclays is right not to take HMGs money, therreby avoiding HMG's meddling and ideological agenda.
Others think Barclays is motivated simply by the desire to keep paying bonuses, and the shareholders can go hang.
My guess would be that this is a bit of both. Barclays does want to keep paying bonuses (which seems, shall we say, a self-interested approach) but ALSO wants to avoid HMGs meddling.
I can sympathise on the latter point; if I thought that I was going to have to run my own business on the lines of Brown's messianic, son-of the-Manse moralistic drivel, I'd shut it down first, or at least seek any alternative, so I can see what Barclays are thinking.
The point that few have raised is future expectations. My guess would be that Barclays, like me, thinks this recession has a very long way to run yet - five years minimum, ten years most likely, fifteen years possibly.
So they're looking at longer term relationships and future capital requirements, in which sense HMG (with its social rather than business agenda) would be a more uncomfortable bedfellow than the Middle East guys. This might be the explanation, methinks....
Complain about this comment
post 51, virtualslavery hit the nail on the head.
It would appear that the smaller shareholder, often a customer of the bank too, has been sacrificed at the expense of the larger shareholders, and we are powerless to do anything about it. Unless we form a partnership to protest.
As a PR exercise this has been atrociously handled. It smacks of extreme arrogance. Alienating the little people, instead of rewarding their loyalty, makes no sense.
Complain about this comment
Good story. The question this raises in my mind is:
What are the board doing while execs take more expensive capital to protect their own "freedom", i.e. erode shareholder value?
If boards in this country did what they are paid to do (look after shareholder interests) a little more often then we would all be a lot better off.
Complain about this comment
I am not sure why Barclays are being pilloried for acting quickly, decisively and independently. They have beaten the government banks to their cash by some margin. Well played.
I imagine this is the best deal they could do in the circumstances. I would be highly surprised if all Barclays' largest shareholders were not well in the know and asked a) if they were prepared to do something similar and b) if they approved of the terms that were likely to be on offer for those that were.
It remains to be seen whether the Lehman deal was a good one, but I suspect it will prove to be so. Just ask yourselves whether they could do something similar whilst in hock to the government and I think you have the answer as to why they did it this way and did not take HMG's shillings. And why is this suddenly bad news? (Answer - it offends Robert's own personal sensitivities).
Complain about this comment
#80 You cannot reason with "the people" when they are hell-bound to conduct witch hunts that puts the Salem Witch Trials to shame !!
They think they know everything based on a few presumptions and no amount of inconvenient facts will alter their outlook !! Some of the media seems to want to play the role of The Witchfinder General, historically one of the worst mass murderers in England.
Few are willing to look beyond the surface of the news and seek the real reasons behind any of it !!
Such are the very lemming-like characteristics that sharp operators in the markets look for and bet against and make tons of money while the lemmings fall over the cliff !!
One major investor in Barclays is Temasek (Singapore government Sovereign Wealth Fund). They didn't get so rich by being stupid !! If there has not been even squeak from them, then there has to be more to this than meets the eye and it might behoove us to look further before condemning this Barclays deal out-of-hand !!
Then again, as the great P. T. Barnum said, "There's a sucker born every minute !!"
Complain about this comment
Good on you Barclays for sticking it to the man! I am proud to bank with you today. (Limited time offer, certain conditions apply).
Complain about this comment
One other thing that Mr. Peston did not seem to have taken into consideration in his article is that - while the Middle Easterners are paying for their deal in hard cash, HMG wants to pay for theirs in monopoly money. If Barclays is to do business internationally, monopoly money is of no use to them.
Perhaps that is a factor that the Barclays' board took into consideration when they made their decision !! Hence the perceived "discount" in their share offering !! The perceived difference between real hard cash and monopoly money !!
With the devaluation of the sterling an on-going thing, perhaps their final payment will be worth more in real terms !!
Complain about this comment
Of course the main reason you want to maintain the right to pay high salaries is so you can head-hunt talent from other banks easily.
Just like happened to any talent that showed its head at the FSA - it was pitifully easy to tempt that talent away, after they'd got a full understanding of the regulations and ways around them.
Complain about this comment
From Al-Jazeera 14:09 GMT
"Barclays' investor base has been transformed in the past two years, as it has raised funds from investors in China, Singapore and Japan as well as the Middle East, and the bank expects to benefit commercially from the links as well as getting cash.
"There has been a significant shift in the availability of capital and economic power in the world over the last five years and we're ensuring we're aligned with those changes," John Varley, the chief executive of Barclays, said."
This makes more commercial sense that merely preserving the bankers bonuses !! However, as George Orwell would have said - The Ministry of Truth is always right; even when it is wrong !!
i.e. just prior to the lemmings jumping over the cliff, the smart operators will buy up what the lemmings want to sell and wait for the profits to roll in from Barclays' foreign transactions in the future !!
Complain about this comment
Maybe with the Arabs having circa 30% of the shares they might decide to cut off a few fingers ,hands or even arms of the greedy bankers who get caught in the till.
BE WARNED.
Alexander Curzon
Complain about this comment
Another thought. Barclays' business is lending money for interest. The Islamic faith terms this 'usury', and condemns this practice absolutely. (Indeed, some Islamic commentators have said that the whole of the west's current banking crisis has been the direct result of contravening this rule. They seem to have a point).
In this context, how on earth can Middlle East investors possibly take a big stake in Barclays?
Complain about this comment
It appears that the board of Barclays has acted against shareholder's interests to protect their own position, which is illegal.
Let's see what happens next.
Complain about this comment
I thought it was a "principle" of the Stock Market that when any shares or quasi shares were issues then existing shareholders had pre-emptive or equal rights. This principle obviously only appplies in nice comfy "tick up" markets when there is enough pie for all involved (the City) to get their "just rewards". Now that does not happen they tear up the rule book.
Why don't our vaunted pension funds have the cojones to stand up to this? That is the biq question.
Complain about this comment
I think at the moment I would rather be a Barclays shareholder than a RBS one. Messrs Brown and Darling seem to forgotten that RBS shareholders do have a right to exist. They also seem to have ignored the fact that many are/were lower paid employees who earned shares as part of their remuneration package. As ever the ones at the bottom of the tree are being punished for the sins of those at the top.
Complain about this comment
As a shareholder in Barclays I am disgusted at the actions and attitudes of the Board. I would like to see an extraordinary general meeting called on a vote of no confidence in the Board. Hopefully this would lead to the dismissal of the entire board of shysters.
How a board can be so arrogant and out of touch with both shareholders' and public sentiment is quite beyond me.
If possible I would like to see the Board subjected to a Judicial Review (or whatever alernative exists). It is time they learned that they have to be, and be seen to be, accountable to more than their own self interest.
Complain about this comment
It really confirms what a failure regulation is in the UK. If I was the FSA, I would be all over Barclays like a rash - everyone has secrets.
Oh, and didn't National Savings used to provide basic banking services, via the Post Office system? I forget who stopped that system now.......
Complain about this comment
I have read and re read this lot and I still do not understand what all the fuss is about. Barclays are a private company and they can go wherever they want for funds. The bonus issue is just a soft target. It is unlikely that the bonus issue is the only basis of the deal. If the shareholders want to gripe they have routes to take the issue forward. If they are not resolved they can sell their shares. I dont like Barclays style so I don t bank with them or hold their shares but as a taxpayer I think it is a good thing they do not have their snout in the treasury trough along with all the other porkers. Surely with everything that is going on there is something more pertinent than this.
Complain about this comment
Most of these comments quite rightly are highly critical of the parasitic directors grossly overpaying themselves.
However the major issue is the complete disregard for the established principle of pre-emption rights of existing shareholders in UK companies.
Even the Government, despite stealing NR and BB, has respected pre-emption rights in its part-nationalisations, and judging from Lloyds and RBS share prices a substantial number of exisiting shareholders will take up some of the offerings.
If shares are being offered at 153p existing shareholders should be given the opportunity to buy them first to avoid in effect part of their company being stolen from them, at a price substantially less than even the Government was offering. Remember Barclays share price was over £4 a month or so ago.
This is clearly an extremely important principle - if Barclays are allowed to ignore it how many other companies will eventually do likewise to suit the directors' wishes and circumstances, fleecing small shareholders and our pension funds., but no doubt feathering thier own nests.
Directors of major banks in particular are rapidly becoming regarded as incompetent thieves.
Complain about this comment
On the one hand, I'm pleased to see Barclay's cocking a snook at nationalisation. Having government ministers and bureacrats running companies is never a good idea. On the other hand, I'm irritated to think that, presumably, as a taxpayer I'm going to be underwriting some aspect or other of Barclay's business whilst they cream off their remuneration packages just like the good old days of banking greed?
In the end, I blame the politicians and their pathetically ineffective regulatory regimes for providing the framework within which the banks proceeded to screw us all. Galling, therefore, to see Brown and his apparatchiks droning on about their brilliance - and even more galling to note that the Tories are nowhere to be seen (as usual for the past 10 years).
Politicians! Utter waste of rations, and John Lewis's rather nice products - paid for by, er, me. Are we all mugs, or what?
Complain about this comment
Come on Peston. On the 6 news you've just said that barclays just wants to be able to overpay Directors.
What basis do you have? This is slander, surely. Why are you not subject to the same editorial control as Ross and the other idiot.
There is past evidence that banks that did not take Government money/straitjacket came out of their crise's far quicker.
Please give us the clear evidence of your outrageous accusations. I'm a Barclays shareholder, so keenly aware.
Give us some evidence or please stay silent. Are you an apologist for the Government or an indepandant journalist.
Oh Lord ..... !!
Bellfoundry
Complain about this comment
#98 Muslims are forbidden to lend money for interest but nothing in the Koran forbids non-Muslims for doing so. Even in the days of Prophet Mohammad, there were Jewish money lenders throughout the Middle East and they were an accepted part of life.
Correct me if I am wrong, but there is nothing that forbids the *investment* in money lenders in the Muslim religion !!
Complain about this comment
Thanks for your reporting, but I dont think its useful to use language such as 'other banks dont want to be "bossed about" by government'.
This sounds reasonably and acceptably Bolshi, with bravado - but in actual fact Barclays is refusing the attempt (however half-hearted) to get banks to act in a more socially useful way at this point.
The banks move fits with the neoliberal credo of deregulation doesn't it?
Dont encourage them.
The push is hard enough on deregulation. And no doubt Barclays is intended to be the private, unregulated model of success that validates unrestrained capitalism.
Complain about this comment
Robert: I believe you have overlooked a significant point in the Barclays deal. The bank has been so heavily criticised for avoiding payment of UK taxes that to go cap in hand to the Treasury would expose them to criticism of the most blatant hypocrisy. I bet this was at the forefront of the minds of the management. Private Eye would have had a field day!
Complain about this comment
Why dont the shareholders vote on this and say no if they are going to be disadvantaged?
Complain about this comment
A simple proposal in response to a deal that smells to high heaven:
1. If you are a Barclay's shareholder, vote NO.
If it goes through anyway (and it will), SUE.
Does the UK allow class-action litigation?
Then, as soon as you can afford it, SELL.
2. If a Barclay depositor (this one is easy!) WITHDRAW. Close the accounts, and move to a competitor. Vote with your feet. The phone calls from branch managers to the home office when they see customers walk away with thteir cash (and loan business) will send a clear message.
Complain about this comment
I think this deal is very poor for the existing shareholders. Much has been made of the tax deductibility of the 14.5% coupon. However, in the short (and perhaps to medium) term this deductibility has little value since Barclays like all major bank have substantial write-offs which has created a pool of losses available against future taxable profits. The coupon deductions will only go to increase this pot.
Call me cynical but I think this is an exercise in mutual, "back scratching". I recall these investors had bought Barclays' shares earlier in the year (or perhaps last year) at what now appears to be at an exorbitant price. Their problem is a big loss on the earlier investments. Barclays management's problem is they want maximum "commercial freedom" presumably to enrich themselves with unfettered bonuses. This deal is a neat solution for both parties-These investors get a deal more then enough to wipe their losses and Barclay management get a large slice of shareholders who would be useful in supporting future executive compensation schemes.
Complain about this comment
#107 As stated in my earlier post, from what I can gather, Barclays has sound *business* reasons for its decision and it seem that various journalists and other posters have latched on to the bonus issue with total disregard to these facts.
The bonus issue seems to me to be a red herring perpetrated by someone and is then taken to be God's own truth by many !!
Until we have *ALL* the facts to hand, can we stop condemning Barclays for now ??
To be judged guilty until proven innocent seemed to be the order of the day here !! So much for British justice and the British sense of fair play !!
Complain about this comment
Those that want to vote "No" to the proposal may do so at an EGM. However, to then *NOT* accept defeat by the majority votes and try to sue is foolishness in the extreme.
The majority votes now belong to the various Sovereign Wealth Funds and they may have been consulted beforehand. If you do not like their views, you are free to sell your shares in Barclays. Those funds will happily hoover up your shares.
As for taking away your loans, you are free to do so *PROVIDED* you have paid back the loans in full and any early redemption penalties. I would be most interested in how you can do that since if you have the money to do so, why have you taken out those loans in the first place ??
Complain about this comment
As a small shareholder I am dismayed by the way Barclays Bank have destroyed the value of my shares. I do not believe in rewarding either incompetence or failure so I am determined to remove all my savings and current accounts from Barclays. The same goes for my Goldfish credit card just as soon as I have cashed in my points. I will probably hang onto the shares until they show some improvement. It's as plain as day that Barclays is run by and on behalf of the lucky few at the top.
Complain about this comment
I find the analysis and explanation illuminating.
As a small shareholder in Lloyds TSB I was thinking of switching to Barclays to hopefully keep getting dividends.
Following reading this I'm staying put - Thanks Robert!
Complain about this comment
I wonder if Barclays board and executives have told any of its shareholders, but old and new that they took on the fiducuary duty to pay off thousands of investors in a settlement and after 9 months they still have not paid them, and are currently using questionable practices to profit from the funds. I think its new investors should do their proper due diligence and they will surely find out why Barclays did not ask for government funds or funds closer to home.
Those close to the situation already know investigations are underway.
Complain about this comment
I'm sure there's more to this than just keeping the likes of Bob Diamond and his fat bonuses happy. Do Barclays by any chance provide Prime Brokerage facilities to lots of hedge funds? And if so, do they fear that the government might stop such activities if Barclays had taken the cheaper option and accepted the government as a minority shareholder? Whatever the truth may be I bet Barclays are up to something that they don't want to become too public!
Complain about this comment
This is a clever move. They get into bed with the Middle East, a sure area of long term growth and finance for the global economy. They don't need to play silly UK games. It transforms them into more of an HSBC than an HBOS. So not the remaining banks will have to choose whether or not to get capital from the UK government or not. If Barclays can go and get some capital, they will be thinking that they can too! I think they will. Might leave Gordon and Alistair with egg on their face.
Complain about this comment
1) HMG prefs are redeemable early unlike the Barclays notes which cannot be redeemed until 2019 so Barc are stuck paying a massive interest rate until then. Had Barc gone for the HMG arrangement they could have had another small rights issue in a year or twos time to pay back HMG prefs (or if their alleged good profitability continued, funded the redemption from retained earnings)
2) HMG prefs are not convertible to equity and do not carry warrants. Barclays allow most of the notes to convert to equity at about 155p a share!
3) The HMG offer to buy equity allows existing shareholders to take up the new shares instead. Barclays have taken away existing shareholders pre-emption rights.
Why have they done this?! Surely to sweeten any deal they'd have kept something in the pot for long suffering existing smaller shareholders.
Answer, because they care not a jot about them.
Complain about this comment
Barclays also knows that its large tax avoidance business would never survive UK Government involvement.
Complain about this comment
Frankly this makes me sick.
My mother in law died earlier this month and I?ve been going through her personal papers in order to sort out her estate.
She didn?t own her own home ? lived in a council flat for 56 years and she and her late husband weren?t high rollers. He was a postal worker and she was a housewife. Yet she had managed to save enough to exclude her from claiming most benefits. She received a widow?s pension of less than £1,000 a year and a state pension.
Most of her savings were with Barclays. The Woolwich as was.
In 2000 she decided to do something with her savings and a Woolwich tied financial advisor ?advised? her on her savings.
I?ve seen the financial advice documentation. It?s a travesty. ISAs and National Saving were completely discounted. Despite being tax free and offering a good rate of return. Instead this advisor recommended investing in Woolwich OpenPlan. A saving account and current account ? even though she had a current account with the Alliance and Leicester.
She invested slightly more than £30,000 ? you could invest £33,000 tax free in National Savings and ISA and get the interest paid monthly. This financial advisor?s recommendation was to place it in the aforementioned Woolwich product. The Woolwich was taken over by Barclay?s in 2006 and accounts became ?Barclays Flexible Savings?.
I received the closing statement following her death. The interest she was receiving from Barclay?s was 2.40% per annum. Inflation is at 5% and as a pensioner her personal inflation was around 8%. Barclay?s were robbing her.
No wonder Barclay?s are prepared to borrow £5 billion at something like 12.5%. With customers like my late mum in law they?re coining it!
And Barclay?s and their ilk claim their stability in the current turmoil is because of their large retail base. Not something to crow about I would have thought if they treat their customers as badly as my mother in law.
Complain about this comment
Comment 107 : bellfoundry
"Come on Peston. On the 6 news you've just said that barclays just wants to be able to overpay Directors.
What basis do you have? ...
There is past evidence that banks that did not take Government money/straitjacket came out of their crise's far quicker.
Please give us the clear evidence of your outrageous accusations.
Comment 114 : ishkandar
"As stated in my earlier post, from what I can gather, Barclays has sound *business* reasons for its decision and it seem that various journalists and other posters have latched on to the bonus issue with total disregard to these facts.
The bonus issue seems to me to be a red herring perpetrated by someone and is then taken to be God's own truth by many !!"
I couldn't agree more with what both of you have said. What Peston has reported today is no more than completely unsubstantiated allegation, and is the sort of thing that you wouldn't expect in a reputable news service even from a cub reporter.
Unless, of course, BBC guidelines have quietly come in line with the tabloids, and their reporters have been instructed to consider themselves more as propagandists than journalists.
Complain about this comment
# 2
Just as soon as the RBS/NatWest, HBOS LloydsTSB Alliance have broken the Covenants of their Tier 1 Capital Government Loans you will have your, Retail Only, Bank to handle the uncomplicated transactions that 95% of the populace needs.
For the life of me I cannot think why any Corporate of any standing would wish to have any further dealings with such 'potential defaulters'. The sign on the road ahead for Scottish Banks reads 'Dead-End'...
We can no doubt expect little more transparency and clarity from the next set of Statements and Announcements, than for example was provided by RBSG when promoting their £12B Rights Issue earlier in the year... Who heads up their Risk functions? Did they not realise what was happening? Were they 'afraid' of Sir Fred? Surely not! Not on their salaries...
We must reasonably brace ourselves and expect some horrendous Asset Impairment this time round...? A little more honesty? A little more integrity? If so, can anyone then truly expect a business to pay a (let's assume for roundness 10% premium - if base rate moved to 2%...) on borrowings over a sustained 5 year period?
I consider only the 'Preference' element of their 'deal with the devil'.. The consideration is this... RBSG will pay back 60% of its borrowings over a 5 year term. Alternatively, £5Bn plus £3Bn, i.e. £8Bn - on the back of ongoing losses!!! Break your covenant with the devil, and suffer the consequences - full blown nationalisation. Brown gets his Peoples Bank (for has he not been a long time believer?). Shareholders get full Market-Value or alternatively £NIL.
Brown delivers to the People! and gets a new Post Office for nothing! Rural communities, deprived areas, blah, blah, guffaw, guffaw
Correct me if I'm wrong, Brown, and Lord Mandleson, also have eyes on the bigger prize. Surely they can undermine the SNP irrepairably - if they can 'sink' the Scottish Banks - remove their 'right' to issue their own notes even (Can you believe that tonight there is any substance to their issue - I think not....! Why accept one in exchange for your 'last' pint).
By 'neutering' the Scottish Banking system, he removes any possible way forward for his 'backward' nation. He re-establishes 'Old Labour' in Scotland, and Lord Mandelson wreaks his 'NuLabour' havoc south of the border...
Ten more years...
Complain about this comment
Oooh, I wonder where a big UK bank wich is fed up of paying NULAB excessive business taxes and wants access to vast lumps of capital might want to take its headquarters to?
Please choose from a list of major middle-eastern shareholders!
Complain about this comment
If you accept the tenor of #125 bear in mind that the Leader of the SNP was once an outspoken Economist with RBS - neither organisation is hailed by the PM!
My inkiling would be that Browns demeanour would delight in the demise of the RBS, and offer up the Bank of Scotland site at The Mound as a monument to His glorious leadership...
Need I add more...?
Complain about this comment
Got home
Final comment:
All thre kings horses and all the kings men couldn't put Humpty together again.
Complain about this comment
The principle of a poison-pill defence is that it should be a threat, not that it should be swallowed. Lloyds were already suffering the first symptoms before they were even cleared to put the HBOS takeover onto the rails, now we have Barclays in the Gulf of Despond. With King Kong and Shanghaied Banking Corporation, that just leaves Royal NatWest anywhere near controllable. How exactly does the Chancellor propose getting his loans back now? At least the Conservatives only allowed companies to offshore once they cleared all their debts.
Complain about this comment
As I understand it ,Barclays will still be covered by the Gov !bail out " plan . So if this deal with the Arabs should go wrong they can still expect us the taxpayers to bear the brunt !!If this is the case then the Gov should make it clear that Barclays and its shareholders are on their own ! Why should they be exempt from the conditions imposed, but at the same time lay claim to the safeguards which the other banks have been given. Greed and self-aggrandizment are ,it seems still the mantra in some quarters !
Complain about this comment
Both #125 and #127 are interesting because they imply that Brown is destroying both HBOS and RBS for political reasons.
As a supporter of Scottish independence I have indeed wondered about this but concluded that actually not even Brown is naive enough to believe that wrecking these banks would play into Labour's hands in Scotland.
In fact, he's done everyone who supports independence a big favour. It was always going to be difficult to work out what to do with HBOS and RBS post independence because of course they are solidly part of the "City establishment" and all that represents.
So neutering the two Scottish banks actually presents the opportunity of dumping them completely and starting a new regional bank that is completely disconnected from the City and will also allow us to look again at the concept of establishing an Oslo style/size stock exchange.
Every cloud has a silver lining !
Complain about this comment
A very wise move by Barclays. You cannot believe that Lloyds TSB/HBOS and RBS would not follow suit if they could? Government ownership, majority or minority will be a living nightmare for these organisations. Gordon Brown was born to interfere and thus ruin. While much of the current rhetoric surrounding 'support for small businesses' is for public consumption, the urge to interfere and ignore commercial reality will ultimately be too great a temptation. If only British Leyland was still around to enjoy this feast at bank shareholders expense!
Barclays has also realised that this support is anything but temporary. The British Government took a controlling interest in the Anglo Persian Oil Company (BP to you) before the First World War and only departed in the late 1980s.
Where Gordon Brown treads, misery and financial irresponsibility will quickly follow. Well done Barclays, your shareholders should go down on their knees in thanks!!
Complain about this comment
Why can't the British public be offered 14% return, more than double the best offer on the high street, from British bankers of a British bank based in Britain with British shareholders ???
Complain about this comment
@ 132
How could the government possibly be worse at running the banks than they themselves have proved to be?
Nationalise them.
Complain about this comment
This is a no-brainer for Barclays, as it would be for most commercial outfits.
Given the option, would a commercial outfit rather be
a) in bed with a Government who appointed Directors to the Board to make sure that Government policies are uppermost and that the outlook of the Company is UK inward looking.
or
b) in bed with an Investor who appreciated that the World is bigger than the UK and that commercial opportunities reside elsewhere and are different from being driven solely by UK Government Policies.
Add into the equation that the Middle East (Dubai and Qatar) are growing fast and are likely to become the hub and the centre of future worldwide commercial banking activity, then tying one's future to the likes of Darling's and Brown's fiscal policies and management, would appear to be a commercial disaster waiting to happen.
So longer term, outward looking Barclays and HSBC are likely to do better than inward looking and Government directed LLoyds TSB HBOS, RBS, Tom Cobley et al.
Brown and Co assume that borrow and spend on bigger Government staffing and overheads and pc projects is a strategic vision, whereas the entrepreneur and SME wants lesser government involvement and less taxation in their building of the country's wealth base
(which incidentally, produces the real economic benefit)
It won't be any surprise to me when our larger companies are driven by the Government wealth destructive policies, to shift their tax bases outside of the UK.
'In Global terms, your wealth used to be worth x but it is now worth a lot less than x thanks to the sinking pound, inflation and other factors arising from Government management, borrowings, and the printing of yet more unearned money'
Complain about this comment
This is a good thing for Barclays shareholders. Maybe not in the short term but in the Medium to Long Term, Barclays will become one of the leading Global Banks, without the UK Government being able to regulate pay for Executives at Barclays they will be able to attract the best talent from around the World.
America has also invested in its banking system and will be under a Democratic Government very keen to make sure that investment is not going to Executive's pay.
If you want the UK to come out of this recession then you'll be greatful that Barclays can operate outside of the control of Governements on both sides of the Atlantic and that they will help keep free markets alive and keep Britain at the forefront of financial services.
The Arab Governements have not invested in Barclays for some Political gain but purely as a very clever business investment. Barclays will be stronger than possibly any other Global bank in 10 years time and when the Oil is running out the Arab Governments will have spent their Petro Dollars very well.
Enterprise and Free Markets must be kept alive we are all responsible for reckless borrowing people should have self control and just because money was offered by bankers it does not mean you needed to take it.
Complain about this comment
The gov't can miraculously find billions for bailing out the banks....but when comes to equiping our soldiers....
http://news.bbc.co.uk/1/hi/uk/7703419.stm
Lions led by donkeys.
SHAMEFUL!
Complain about this comment
Well done Robert Peston - on the ball as usual. Why are more people not calling out, for a national enquiry to get to the bottom of our partially corrupt banking system? We need to really examine what sort of capitalism we want.
Complain about this comment
Having banked with Barclays for almost 30 years, I am utterly sick of the Bank's unbelievable contempt for their retail customers. Have recently begun banking with HSBC and have been welcomed with open arms, have been offered a HSBC Premier Account only after 6 months, and I will be voting with my feet as far as Barclays is concerned. Why doesn't Barclays have the b***s to front up the Bristish public and admit that it has no genuine interest in retail Banking...what should be the very lifeblood of its business. If Barclays does go tits-up over getting into bed with the Arabs, the Government would be forgiven for doing a Paulson and leaving them to the same fate as Lehmans'
Complain about this comment
I work for Barclays Commercial, and I understand why the decision has been taken raise capital from the middle-east. The main reason is to avoid any form of nationalization to Barclays, and attempt to leverage customer confidence out of the situation. Whist the situation clearly isn't ideal (capital-raising issues rarely are!) raising capital from overseas investors (who already hold a significant stake in the bank) is a much more conventional method of capital-raising. The stigma attached of accepting the Bank of Engalnd money will not, in my opinion, help some of the other clearing banks in the long-term with respect to credibility and reputational issues.
Of course the issues over executive bonuses will have been a factor of the decision, it would be naive to think otherwise, but I think the main reason was a commercial decision by the bank with regards to potentially growing it's market-share.
As for the reception the news has recieved it is difficult to completely understand the negative reaction - what where the options? Other banks that have accepted the Taxpayer's money have been criticised for poor management, and now Barclays is criticised for not taking the taxpayers money, and allowing investors e.g. taxpayers to gain the potential for a solid investment.
A final point is that Barclays employs hundreds of thousands of employees across the UK, most of which (and me included) do not want govermental interference in their jobs - particularly having a say over your financial package. Most of my colleagues (99%) would normally have the potential for a bonus (and we're talking anywhere between a few hundred pounds and a few thousand pounds) which is dependant totally on performance and exceeding targets. To have this externally modulated, would impact upon objectivity of the system.
I'm sure there are a minority of bankers that will be eligible for disproportiate bonuses, but to be honest I've never met one (I presume they are all in some fancy office in London!) and in the present climate I would dislike them as much as anyone else.
Complain about this comment
# 131 Scottish independence / what a great idea, smaller Governement like Norway have weathered the storm much better in the Global World over the last ten years.
That is if you did not behave like Iceland.
Much of the idea for Scottish independence was supported by the over confidence that Scottish Politicans had the fast growing financial growth of banks such as HBOS and RBS.
There was a feeling that Scotland had become a Global player in financial services but had Scotland become independent they would be bankrupt much like Iceland.
With Scottish banks nationalised and on their knees it would be extremely hard to establish a new Scottish national bank and a stock exchange, where would the money come from?
Complain about this comment
Mr Croft. As has been widely reported, with the invention of new inert medical glues, it is, in fact, entirely possible that Humpty will live again.
In fact I predict a brief period of 'frothy news' followed by the resurgance of a 'New Humpty' presaged by a golden escort of all the kings men.
The yolk is on us.
Whilst I have never liked Barclays bank, i applaud their independance but do wonder who will sub-let that stonking great building in Canary Wharf. I guess the Social Security department must grow and move somewhere...
Mr Peston. I have to wonder about 2 posts questioning a single private company. this is most strange for me, have they called in your overdraft?
Finally, i understood (from these forums) that Barclays was the ONLY bank that would be allowed to disperse this 4billion squids worth of company assistance. from experience and comments here regarding the slightly usurace(?) nature of the bank - God Help Small British Businesses.
God Save the Queen??
Complain about this comment
I am a Barclays 'premier account' customer. I do not wish to be a customer of a bank which is 32% owned by autocratic Gulf states who refuse basic human rights to operate in their territories. In both Abu Dhabi and Qatar there is no real freedom of religion (apart from Islam), a lack of gender and racial equality and no democracy. In addition the majority of the population of these states consists of expatriate workers who have few employment, let alone other, rights. In particular the rights and conditions afforded to many ex-pat manual workers from the indian sub-continent are a cause for international concern.
In accepting this deal Barclays is showing a lack of Corporate and Social Responsibility, and a poor ethical stance, which will cause considerable damage to its corporate image, market share and future profits. Shareholders must act now to reject this deal and protect their investment and the future of Barclays. This is an appalling deal for not only shareholders, but also for Barclays customers, emplopyees and the UK Taxpayer. Barclays CEO should resign.
Complain about this comment
Now that Barclays is set to be part nationalised by the Governments of the UAE and Qatar, will it be pressurised to start offering Sharia Banking products and thereby act as a conduit for the further Islamisation of Britain? The Archbishop of Canterbury has approved Sharia Law and it can be only a matter of time until Sharia Banking follows.
Why else would the Arabs want to invest in Barclays if they did not have a political agenda? After all they have taken a substantial loss on their previous investments. As for Barclays making money in the Middle East, the French and Germans are the favourites there.
Complain about this comment
I will be pulling my money... both my personal and business accounts...and going elsewhere.
Complain about this comment
# 98. Friendlycard
Financially, Islamic banking is bogus.
Instead of paying interest, you are expected to pay an artificially high price for the goods.
So the 'lender' gets a profit in lieu of interest, and the 'borrower' gets to pay an artificially high price in lieu of interest.
Debt is evil (but a necessary evil) - I would support any mechanism that did away with interest as it encourages lending (which therefore encourages borrowing/debt), but Islamic banking ain't it.
But if muslims are happy with it, that is their business.
Complain about this comment
#144 They are also "part nationalised", as you call it, by the governments of China and Singapore. It does not mean that they'll be selling Chicken Chow Mien and Sweet and Sour Pork (definitely *NOT* halal) !!
You could always use a good British bank like Abbey. They are "only" 100% owned by the Spanish !! And Abbey is not going to offer you a free paella with every 1,000 quid in your deposit account !!
#139 It may surprise you to know that the Arabs also have shares in HSBC. So have lots of various foreigners !!
#133 The British public can also be offered 14% if they can produce large dollops of hard cash up front and guarantee that the country will not go into a recession in the foreseeable future !! No funny money, please !!
Complain about this comment
Busby82
84. The market is irrational and jittery at the moment.
I suspect it will very shortly be announced that Bob Diamond and his colleagues have decided not to take a huge bonus in the short term. Will that make anyone feel better. Ecopnomically that shouldn't make much difference to the share price to be honest....... it is a few million ........... but in this silly market (where sentiment and investor confidence is key) it will probably send the share price soaring.
I am laughing up my sleeve that some of you are outraged that Barclays are only in the business to make money.
Might Robert Peston do the economics for us, please? Let's say all bonuses (at last year's levels were cut, how much difference would this actually make to the bottom line? Perhaps then it will be proved that the "greedy bosses just want their bonuses" angle is really a bit silly.
Complain about this comment
Yesterday as a result of this I closed my account and moved to a new account with a mutual building society. A couple of other friends are decidign to do this too.
I'd far rather profits go back to the mutual's members (or the taxpayers if you choose, say, Northern Rock) than the bankers' inflated bonuses and the Abu Dhabi royal family!
I wish I'd done this earlier: I found the terms were better! Surprise surprise!
The only way the bankers will learn is if there is a mass movement along these lines.
Complain about this comment
This is a good deal for Barclays shareholders as the deal allows them to receive a dividend whilst the govt offer does not.
Without dividends bank shares are worthless.
Complain about this comment
While I am as keen as anyone to give banking bosses a 24000 volt reality check, it seems to me that we're trying to have cake and eat it too here.
Frankly I couldn't give a stuff about a few thousand already wealthy shareholders - but I am utterly fed up of bankers deciding, as it were, that when the market which must always decide decides against them, the government and its taxpayers must pick up the bill.
It was bad enough three weeks ago with greedy Lloyds shareholders whingeing about paying too much for HBOS because their hedgie chums had attacked the price.
If you don't like the heat chaps, then stay out of the kitchen.
Equally, I am unable to grasp why the assumption of Barclays and HSBC is that, if they avoid the government bailout scheme, this puts them above the law.
This is a banking assumption that has been in existence since the first caveman loaned a second caveman a spear with which to attack the nearest mammoth. It is a daft notion which is at long last about to get its comeuppance.
I have yet to receive a valid reason from Peston or anyone else as to why we didn't simply rescue the depositors and let the institutions go hang. 'Because the system would melt down' I'm told. Which is worse, is it, than a pointless rescue leaving the UK insolvent?
Give me strength
Complain about this comment
I find it hard to believe that so many readers are so anti-foreigner. Do any of you realise just how much of British share wealth is actually owned by foreigners?
Or how much of British industry (well, possibly the wrong word because we have none left) but British companies anyway are owned by foreigners - banks, water, electricity, motor manufacturing all have big overseas stakes.
Perhaps this blog has been taken over by the British National Party, or those who want us to leave the EU.
Just face it - Barclays made a commercial decision for commercial reasons. It might have been executive pay, or maybe they just didn't want to have to take orders from people like Dennis Skinner?
There is a lot to be said for taking orders from your shareholders, rather than the leader of the Labour Party whose decision making is often influenced by how many of his backbenchers can be trusted to vote for what he wants.
I'm surprised Robert Peston has made this story into a purely financial one, when the reality is that Barclays are willing to pay a massive price just to avoid having Gordon Brown making every important commercial decision the bank faces.
Personally I think this was a good decision by Barclays, and I think time will show that their ability to act without having to get Treasury approval all the time will show great benefit in the long run.
Complain about this comment
With reference to the possible intervention of another financial institution the following quote has appeared...In a statement, HBOS said: "We do not comment on market rumours. We have a recommended deal with Lloyds TSB which brings certainty for our shareholders."
May I ask why any employee of this bank sees himself in a position to comment on what the shareholders, ultimately his employer, should consider certainty?
Complain about this comment
Jim Kunstler, author of 'The Long Emergency' :
"we are witnessing the two stages of a tsunami. The current disappearance of wealth in the form of debts repudiated, bets welshed on, contracts canceled, and Lehman Brothers-style sob stories played out is like the withdrawal of the sea. The poor curious little monkey-humans stand on the beach transfixed by the strangeness of the event as the water recedes and the sea floor is exposed and all kinds of exotic creatures are seen thrashing in the mud, while the skeletons of historic wrecks are exposed to view, and a great stench of organic decay wafts toward the strand. Then comes the second stage, the tidal wave itself -- which in this case will be horrific monetary inflation -- roaring back over the mud flats toward the land mass, crashing over the beach, and ripping apart all the hotels and houses and infrastructure there while it drowns the poor curious monkey-humans who were too enthralled by the weird spectacle to make for higher ground. The killer tidal wave washes away all the things they have laboured to build for decades, all their poignant little effects and chattels, and the survivors are left keening amidst the wreckage as the sea once again returns to normal in its eternal cradle."
What caused this problem? The New Economic World Order is ready to reveal.
Anyone ignorant enough to think that they will be ok!? Try arguing that in the coming few months. Any sane person would look out for the best interests of his/her family/friends.
http://economicapocalypse.blogspot.com/2008/10/down-rabbit-hole-towards-new-economic.html
Complain about this comment
Could there be a case of "hoist on their own petard" here?
Barclays said they'd spurn the bailout and seek funds elsewhere. Having said that, their negotiating position was, perhaps, weakened, by virtue of the middle-eastern investors knowing they were dealing with a distressed applicant.
Besides, surely this kind of deal should be subject to a vote by existing shareholders?
Complain about this comment
After all the castigation of Barclays for seeking Middle Eastern funding, our dearly departed, oops sorry, I mean beloved, PM is asking for *MORE* investments from the Gulf States !!
BBC headline today !!
The begging bowl has truly been put out and is there for all to see !! Barclays merely jumped the gun and, perhaps, got a better deal. Later begging bowl "handouts"/rescues may not get such deals anymore when the desperation is so blindingly obvious !!
What's next ?? Camels in tartan kilts ?? The Scottish national dish changing from sheep's stomach to sheep's eyes and testicles ??
Complain about this comment
Why would any one *presume* that the existing majority shareholders will vote against this deal ??
The hubris is so overwhelming !!
As a wise man said. Berate not the little lizard when he say his ancestor was a mighty dinosaur. After all, it is all he has left !!
Complain about this comment
This comment was removed because the moderators found it broke the House Rules.
This is not an original suggestion, but it seems to me to have a lot of merit in relation to curbing all excessive bonuses. Let companies pay any bonuses they want, but limit tax relief on these to say £200,000
This approach is taken with tax relief on cars, so why not on bonuses.
Complain about this comment
Free enterprise business eschews nationalisation offer in favour of private equity.
And this is bad news?
I know Robert that you consider people's taxes are an everlasting fountain of money and government borrowing isn't a problem.
It's not as if the government hasn't maxxed out its borrowing is it including NR, PFI and Network Rail?
In the real world, taxes are our income taken from us and borrowing is something us taxpayers have to pay back!
As for where the money comes from, like the execs of Barclays, you have a choice so bank somewhere else.
I would have thought a private business doing deals to avoid nationalisation would be applauded.
Then again, the tired old narrative is blame the bankers isn't.
Nothing to do with the appalling regulations invented by Gordon Brown or that the UK has needed the largest cash injection of all major economies.
We are SO well placed to survive this recession.
Look! A flying pig.
Complain about this comment
Bank shareholders have no right to squeal about the UK govt. or Abu Dhabi.
Without their interventions, there would be no RBS, HBOS or Barclays left.
The UK govt getting 12% for its RBS / HBOS investments looks about right, so the issue is why do Barclays prefer to pay 17%?
The answer has to be to avoid closer regulation by the UK govt, whether in terms of bonuses or risk-taking business practices. It's probably both.
It is a big risk, however, for Barclays to take. If it goes wrong, the UK govt will surely demand an even higher price for any future Barclays bail-out.
The most likely scenario now is that rates continue to be cut all over the developed world, Libors come off as main banks are effectively sovereign-owned- thanks to Brown etc- and the world slowly recovers.
If this happens, then Brown etc deserve some credit from rescuing us all from the banks' gross negligence and complacency- for which their shareholders must pay, unfortunately.
Blaming politicians and central bankers for what the big banks have been up to all over the world for the past few years is misguided- no one forced them to produce, buy, or sell on toxic debts.
Any attempt to hit banks with stringent regulation during the years up to 2008 would have caused cries of 'nanny state' from The Daily Mail to Washington, and any major country to have tried it alone would have faced the loss of its financial industry. At least in this case globalisation has resulted in every developed country being roughly equally affected. Every economy will rebuild at around the same pace, hopefully with its banks having learned an important lesson about risk.
Complain about this comment
Easy money cannot be accrued by the sheeple,they cannot unravel the ponzi system .
Leave "Easy Money" to the Bankers and their Money Multipling Machine or FRB, this site does'nt engage with the
"FRB" words. The bankers and their advisers
Like to defy the laws of mathmatics "the business cycle" being a result of their voodoo economics,the frightning thing is they accept it. Watch Money as Debt for starters.
Complain about this comment
Do Barclays have something to hide? Would this explain their reluctance to accept an injection of capital from the UK Government and their election to instead accept capital on much worse terms from Middle Eastern investors to the significant detriment to existing ordinary shareholders?
I wonder to what extent (if any) Barclays has been directly or indirectly involved in short selling over recent months and, if so, the extent to which this has improved their own profitability at the expense of the value of world stock markets and, in particular, the value of shares in other financial institutions?
Do Barclays have something they need to hide that would be exposed if the UK Government became a shareholder? Are the board only interested in their own salaries and bonuses? Or is there some other hidden agenda? I fail to see where the shareholder value is in this proposed transaction.
If the UK Government had taken a stake in Barclays, would this have resulted in Barclays involvement with short selling (if any) being exposed then curtailed?
Complain about this comment
I think the public need to back off! There was complete uproar when Northern Rock was nationalised, people weren't happy when the other three major high street banks went cap ion hand to the government for money to bail them out of their mistakes and it means those banks are now part nationalised so its share holders relinquish the amount of control they have in those banks. Yet Barclays said no they want to try and get themselves out of the mess they are in and know one has stepped back and said 'We respect them for doing that' and now they are getting foreign investment (which may not be the best thing) people are kicking off telling them they should have took the hand out...it just sounds like everyone wants to keep blaming the banks for this crisis and they are doing so by constantly underminding their decisions, the ones they make to keep their business and our money afloat! Basically they are damned if they do and damned if they don't!
Complain about this comment
#161
So, your view is that politicians such as Brown could have done nothing to prevent the financial tsunami, and that we should be eternally grateful that such super-human competence was waiting in the wings to direct us out of a mire into which we have all been innocently led by a bunch of self-interested bankers.
I suspect that to anyone with a functioning brain, this concept stretches credibility to a point that is so far beyond possibility as to have to be measured in light-years.
Brown's a politician, maybe a very clever and scheming one, but a politician nevertheless. His modus operandi is to seek to establish a social structure that is as close to his ideology as is possible within the constraints of being electorally acceptable. Nothing, repeat nothing, is going to divert him from this objective in life. Certainly not moral concepts such as truth, fairness and reciprocity.
What we have seen over the last 20 years is the most gigantic confidence trick ever played on the electorate of the UK. The big lie has been that Labour is about empowerment of the people, when the reality is that it has no concern whatsoever for individual people other than how to maximise their efficiencies as slaves of the state. Repeat this lie over and over again until it gradually becomes indistinguishable from truth. At this stage no amount of intellect or reason can possibly shake it, for it has a stature in the mainstream belief-system that is beyong reason.
Look at recent developments this way and see that the best-fit explanation is not that Brown was powerless to do anything about it, nor that he was too idiotic and uncollegiate to recognise what was happening, but that the breakdown of the financial system is the culmination of a twenty-year strategy to take command of this sector of the economy for the state.
Pity about Barclays and HSBC. They'll have to be frozen out of the UK economy by other means. Just watch!
Complain about this comment
oh n trum0il, Barclays share holders aren't profiting this year, all end of year dividends have been scrapped to ensure more profits are put back into the bank itself...if you had read all of the press releases from them over the past few weeks you would know this.
Complain about this comment
#154
Financial tsunami
I think that article should be worldwide front page-just goes to show we are all being manipulated by a secret few-we all knew that instinctively, but the article confirms it!
Question is, can we, the ordinary people do anything about it? Answer-no, not unless the information is publicised world wide, and we demand the transparency in the back of it! Time the secrecy was smashed, don't u think!
Complain about this comment
If Barclays shareholders were truly annoyed at this situation, the simple answer would be to vote down the remuneration package of the board at the next AGM and vote out the directors.
But they won't. Because shareholders never exercise their one right to voice disapproval of management.
The shareholders need to man up, and vote the board out. It's their bank, after all.
Complain about this comment
No need, on this occasion, to put the boot in to the bankers.
If you have to choose between a large minority shareholder who is solely interested, like you, in making the company profitable, or one who is likely to want to use your company as a tool for social engineering, well - no contest really.
Complain about this comment
In response to #166 ijdoc86;
This article; http://news.bbc.co.uk/1/hi/business/7701405.stm states; "In a trading update, Barclays said its profits before tax in the nine months to the end of September were better than in the same period last year although it did not give a figure." I stand by my questions. How can Barclays have bucked the trend?
Complain about this comment
Brown has just been to the Gulf to secure "financial support" from the oil sheiks to "bail out" struggling economies (and who can doubt that Britain is one even if Brown doesn't admit it). So presumably Arab money is now a "good thing". Is Robert Peston going to change his line on Barclays now that No 10 has given its "indications". He is the government's mouthpiece isn't he ?
Complain about this comment
Good to see that you are again putting a balanced argument forward, Robert, ha ha ha. Pro-government waffle as usual...
Complain about this comment
Management keep saying they are "acting to preserve the right of self-determination".
Right of Self-determination for whom? The management or the owners (shareholders)?
Whilst the alternative, of HMG partial-ownership, is not an option anyone likes; it is still clearly the least-worst alternative on economic and fairness ground.
Economic because as has been extensively written, the Qatar/AbuDhabi offer is far more expensive - and the muted benefits of "developing closer relationships with the Middle East" is clearly hogwash.
On fairness ground - because the UK banking sector (as in most other countries) are now implicit govt-backed entities. "Agencies" as would be called in the US. If HMG pulled out their various life-support measures, BARC would be insolvent at this point in time. If that is the case, then it is unfair to strip the option of potential future profits from the taxpayer, on to a new (non British) shareholder.
Management can crow all they want about having 'achieved' independence from HMG (that is, assuming shareholders vote through the fund-raising), but they reality is that with or without the middle-eastern money, Barclays (and all the other banks) currently only exist but for the grace of HMG's guarantees. So maybe a little more penitence is in order.
Incidentally, a quick google search of the banker leading the fundraising in the middle-east, raises some 'interesting' stories. The most interesting being the size of his bonus - several times higher than either of his bosses, or anyone else in the industry - and probably the highest in the whole organisation. But of course, that would never be a motivational factor, would it?
Another clear case of the dictatorship of management in public companies.
By the management, for the management.
Complain about this comment
# 170
Maybe they've done a better job of managing the problem assets off their balance sheet. And been more willing to continue to lend rather than panic. Iread somewhere their share of the UK mortgage market has shot up as they are still lending and nobody else is.
It might explain why Barclays has managed to get private sector funding when RBS, HBOS etc have not.
Complain about this comment
How on earth can money be atached an adjective such as Arab?
momey is money.
The wat that barclays management have chosen to protect their own personel rewards as against the well being of their investors is another matter all together.
Complain about this comment
Source FT Alphaville - paraphrased
Because Barclays does not have to issue a prospectus, unlike other Banks seeking Govt assistance then it books can be kept under wraps.
Is this the real reason for the Arab money? What are they hiding?
Complain about this comment
Robert
You did not mention withholding tax. Qatar and Abu Dhabi do nto have a double tax treaty with the UK. Therefore, unless they are doing something exotic, interest payable will be subject to 20% withholding tax in the UK. Of course, their tax people will probably arrange something to avoid this if possible.
Complain about this comment
"Well, it wants to avoid making itself vulnerable to being bossed around by the chancellor and prime minister - which it fears would have happened it had taken taxpayers' moolah."
You, being rather too chummy with those two, probably don't see the dreadful downsides of that. However, being a shareholder I can see just how awful it would be: dividends banned, trade unionists dictating redundancies, mandated lending to small businesses in "key areas" (i.e. Labour marginal constituencies), endless tinkering, bossing and bullying.
Paying billions to escape the clutches of the clunking fist is a price well worth paying.
Complain about this comment
Bob Diamond and John Varley should waive their 2008 pay and bonuses along with the rest of the board of directors.
That would be the right thing to do at the right time - and it would be the PR stunt of the year.
Complain about this comment
I'm not sure I understand the fuss.
The bosses at Barclays are there at the behest and whim of the shareholders. They have the right - should enough of them feel aggrieved - to call an extraordinary meeting and dispose of their self-serving bosses. If that is what they believe will serve their interests. But whomever they appoint will always act in their own self-interest, and that agency cost is just part of having someone else manage your assets for you. Long may it be aligned.
I'm not a shareholder in Barclays. However, I'm a little more worried about the other side of that potential deal as a UK taxpayer. I don't mind the Government stepping in as buyer of last resort, but what is it doing making offers where others could do so.
Would Abu Dhabi be interested in one (slightly damaged) Northern Rock and a collection of other institutions?
Unfortunately, unlike the Barclasy shareholders, I can't call an extraordinary general meeting to get rid of my representatives in this transaction. I need to wait for them to vote for Christmas.
Complain about this comment
I am the holder of both the ordinary shares and the outstanding prefs and find the proposed solution a slap in the face to the long term shareholder base. As I understand it the 14 % reserve capital cannot be repaid for 10 years which will undermine the future capital raising of Barclys. What on earth is in their mind. Is there any way we can have a class action against this appalling deal. The HMG deal is a much better solution.
Complain about this comment
165.
I suppose that part-nationalising Citibank and UBS was always part of the political agendas of those two well-known commie governments, W's USA, and Switzerland... too!?
Complain about this comment
What a clear and damning explanation.
Barclays customers should withdraw their funds and deposit with other banks as a form of protest.
Complain about this comment
Of all the big UK banks Barclays have always been the most self-serving. And this illustrates it very well -- Barclays are quite prepared to slap their shareholders in the face in order to save their pride and remuneration packages. Shareholders should do what shareholders have the right to do -- reject a bad deal if offered one and/or sell up their shareholdings. The Lloyds TSB deal looks much better on paper and the management at Lloyds locked far more into reality than Barclays.
Complain about this comment
One thing Robert hasn't picked up on, is that bonus payments are nearly always made in dollars. Therefore the poor bankers will be getting a substantial increase per dollar by the devaluation of sterling.
Complain about this comment
I do not understand why banks who are in financial trouble are bailed out by the government. Will somebody please explain to me why this is happening?
Complain about this comment
186. (assuming this is a serious question)
Because otherwise depositors' (that's anyone with a bank account) cash is likely to disapppear, with very negative consequences.
If a major bank such as HBOS or RBS truly went bust, you'd quickly see anarchy on the streets as millions became penniless and unable to buy the essentials of life.
In order to pay out the guaranteed up to £50K to those who had lost out, the Govt. would have to massively increase borrowing, probably resulting in a run on the pound and inflation, big-style, on imported basics such as food.
Once one such bank had gone, you'd quickly see savers in other banks stampede to withdraw their cash, and all UK banks- and probably a fair number elsewhere- would swiftly collapse, leading to a state of emergency, looting, martial law etc, as the whole country became instantly devoid of money.
No money= no taxes = no government!
This is why Governments tend to step in to prop up major banks. Big banks / business and governments are interdependent.
Complain about this comment
#10. "So - let Barclay customers vote with their feet if they don't like this."
It didn't happen during the Apartheid years with B's heavy interests there then and won't happen now (at least until people see their accounts in danger).
Complain about this comment
View these comments in RSS