Barclays Bank is first out of the chute today announcing GBP 6.1 billion profit FYE 2008 after “significant” write downs!? HOW significant needs to be asked. Varley and Diamond have gone to great lengths to stay out of the pockets of the UK treasury (but not sure if they can in the long run). Between these two ’schemers’, they have sold the farm at great cost to the rest of the shareholders to Middle Eastern investors in a form that preserves the existence of Varley and Diamond, at least for now. It is an understatement to say the shareholders broadly speaking, are not happy. Varley and Diamond DESPERATE to stay out of the pockets of the UK treasury for as long as possible to protect their (deteriorating) professional integrity, and of course their precious and outrageous bonuses and of course their jobs! Had Barclays gone in the same direction as Lloyds and RBS; they would both surely be GONE by now. The best thing that ever happened to Barclays was to lose the (friendly) bid to a hostile bid from RBS for that much troubled asset (??); ABN AMRO Bank. This leaves RBS of course with the mess resting firmly in their stable and to say the least it has brought them undone. Although RBS is yet to report it’s FYE results, it is widely expected to be around the GBP 28 billion mark (loss!!). Of course RBS is choking on their own misdeeds but also those evidenced following absorption of (a goodly part of) ABN AMRO bank (while Fortis is choking from absorbing the rest…), plus RBS have huge problems in their USA business unit; so the RBS problems are three fold and Barclays have (only) one! I would put it to you that Barclays are so vociferously arguing against the accounting rules; specifically the “mark to market” requirements of IAS 39, that it seems obvious to all but the uninitiated that there are further problems in the Barclays portfolio and they are glossing over it on the expectation that it will “come good” (someday).
The huge (global) brouhaha about executive bonuses at banks’ is also causing some consternation at Barclays because Varley and especially Diamond have been at the extreme end of the bonus payments in recent years with Diamond receiving tens of millions of dollars for each of many past years. THIS year however, “we will all be watching” to see how much of the bonus will be paid to Diamond as the world is revolted by bankers excesses. Diamond is busy even today in the press:
http://www.iht.com/articles/2009/02/09/business/barclays.4-426377.php
“defending” bonuses to senior executives at Barclays (read: especially bonuses to Bob Diamond!). Lining their pockets with such indescretion will do them a lot of harm personally and professionally. I am sure they do NOT care as their career path is rapidly coming to an end!
Meanwhile back at Whitehall, Sir Fred is going to be hauled over the coals today to EXPLAIN why and how he was able to single-handedly bring down RBS and thereby fuel the UK banking crisis. Of course he is not alone and his boss Sir Tom and Andy Hornby(ex HBOS) et.al. will also be held to account. A bit similar to their US counterparts were a few months ago “across the pond” which revealed the hubris of the CEO’s of Lehman Bros, Merrill Lynch and others in all it’s awe inspiring glory.
We also expect the results of the remaining UK banks to make headlines this week. Also of interest will be HSBC who claim to be relatively strong despite their investment in high profile sub-prime lender Household Finance Corp (“HFC”). I still think sparks will fly there, sooner or later.
I doubt that Barclays will be able to stay out of the UK treasury pockets as they will likely NEED to participate in the “toxic assets program” where they can get some protection from all those volatile CDO’s and other derivatives written at the peak of excesses. When they do, we can all expect the END of Varley, Diamond and others as Barclays must sup at the trough of the treasury much to the consternation of the (new) Middle Eastern investors.
http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article5697765.ece
