Barclays' £300m gift

Well Robert it looks like they really ought to resign then. There's nothing they can say or do to make the situation look good. They've messed up badly and should pay the price for failure.

Another inciteful post Robert. perhaps most of all it shows the sheer panic that is present amongst the board members at banks.

Their current need for lqiuidity is so great that they would offer almost any deal to get cash now. They thought the cash raising in public would take too long and hammer the share price and the Government would interefe with their tax scheming business.

Wrong bet, share price hammered anyway and a terrible deal agreed. At least they can carry on with their tax schemes and try to make some money back...

Another inciteful post Robert. perhaps most of all it shows the sheer panic that is present amongst the board members at banks.

Their current need for lqiuidity is so great that they would offer almost any deal to get cash now. They thought the cash raising in public would take too long and hammer the share price and the Government woudl interefe with their tax scheming business

Wrong bet, share price hammered anyway and a terrible deal agreed. At least they can carry on with their tax schemes and try to make some money back...

Another inciteful post Robert. perhaps most of all it shows the sheer panic that is present amongst the board members at banks.

Their current need for liqiuidity is so great that they would offer almost any deal to get cash now. They thought the cash raising in public would take too long and hammer the share price and the Government woudl interefe with their tax scheming business

Wrong bet, share price hammered anyway and a terrible deal agreed. At least they can carry on with their tax schemes and try to make some money back...

This is surely just a huge error in judgement by Barclay's exec, once again demonstrating how bankers aren't the smartest guys in the room!

That or greed clouded their judgement and fears for their personal bonuses being controlled by government caused them to give a way as much corporate (not their own) money away to ensure their personal wealth!

This may have backfired when they're all not returned in the vore, but I'm sure the severance payments will be (over) generous!

This comment was removed because the moderators found it broke the house rules. Explain.

Sack them all!

They cut their own nose to spite their face, and now it's coming back to haunt them.

Yet another testament that greedy bankers will never never never learn, and will keep repeating their mistakes in centuries to come.

Wow, you've really got it in for Barclays - did they refuse to give you a job in the past?

I'm no expert, but my understanding is that at the time, Barclays couldn't find anyone willing to invest the large sums of money that was necessary. You point out that the FSA didn't require them to raise this money until next year, but given how crazy the markets were at the time, it's doubtful Barclays' share price would have survived long enough for them to find this money by next year.

It's all very well saying they could have raised this money elsewhere, but the ONLY alternative was the Treasury. There were no other investors willing to risk potentially throwing good money after bad.

I'm no Barclays fan in terms of being a customer of theirs, but I respect them for the decision they've made in this case. Yes, Qatar and Abu Dhabi have gotten a good deal but fair play to them - they've been willing to put their money on the line.

I can't help feeling that there's a bit of protectionism here. If it was Standard Life and Norwich Union who had taken up these RCIs and warrants at the expense of all the other shareholders in Barclays, would you have been kicking up such a fuss?

You (and by extension Alistair Darling) are increasingly looking like spoilt children who haven't gotten their own way. Considering all the business news you could blog on, there's been a disproportionate amount written:

a) complaining about Barclays and the deal they've given to Qatar and Abu Dhabi, and

b) Trying to convince Lloyds shareholders that they MUST vote to take on Halifax

c) Trying to convince everyone that there's no possible alternative for the Halifax than Lloyds taking them over, despite other potentially viable alternatives.

Fantastic and we wondered, with experts running them, how banks got into problems in the first place.

Just goes to show they have less of a clue than the average person in the street.

Trouble is, if they get kicked out, they will pop up as advisers to the government as Gord likes to be all inclusive.

I'm not sure why Robert Peston is surprised about Barclays actions. I few weeks ago I raised some serious very similar questions about Barclays in a comment on this blog.

The moderator refused to post those qustions. The moderator refused to give me an explanation as to why my comments were not being posted.

This comment was removed because the moderators found it broke the house rules. Explain.

Gripping reading but I really just don't know why you're reporting this particular story, RP unless you mistakenly think everyone is fascinated by it.

I say this because the banking system has almost become an irrelevance except to say that those with the worst balance sheets are pursuing a kind of desparate 'ethnic cleansing' by dispossessing people and firms in a ruthless stop-at-nothing attempt to recapitalise. The banking story is so over, there a much, much bigger issues now.

Why an irrelevance? Because banking is - historically - there to facilitate trade.

Trade means firms getting access to funding without a lot of huffing and puffing and everything I hear and read tells me everyone who needs it - can't get it! Even after so much said by Govt, it's not happening is it? If anything firms are more worried about being dispossessed than anything else.

So, it being a primary function (savings, deposits and cheque clearing being secondary functions) then there doesn't seem much point to having a private sector banking system at all, does there? And thus in this context Barclays is an irrelevance.

Shareholders? Well, sorry but like everyone else in business you seem to be stuck with a business (a banking business) that has gotten itself into difficulties. What can I say? Welcome to the club.

The scale of the dispoessession - largely unnoticed thanks to pretty dismal reporting standards - dwarfs the scale of the Highland clearances - that went down in infamy. It should be a red-hot subject for the media, because the media seem to be the only pressure group capable of getting this government to do anything!

We've had weeks and weeks of bank stories RP - time to do some other stuff, really, unless you write this interminable banking stuff to benefit personally in some way.

I assume you are working what happens in the run up to and after the entire collapse of the W World's manufacturing when the 3 biggest US carmakers don't get their 20Bn?
That, frankly, will knock the 'failed bank' story into a cocked hat and definitely put a grass-roots perspective on things - even if you can't.

I think Brown made a terrible mistake putting money in Northern Rock, because he set such an overt and one-sided precedent. I honestly think he thought that would be the end of it and of course now we can see it's just the start. He had a famous chance to nationalise the bank and run it properly and ethically but instead he thought it could run the 'same old way' with a bit of govt money and as we can now see they are top of the dispossession league. An absolute disgrace.

And worse is yet to come. I heard Geoffrey Robinson on Today (aka Toady) this morning, literally saying, in respect of financial support for UK car manufacturers, that they were all subsidiaries of US firms and thus should look to the USA for support. He used words like 'we can't go around propping up failing firms' when the Govt has just done that with some banks. Banks are businesses too! What tis the difference? And the notion that the Govt shouldn't offer loan packages to car firms in the UK flies in the face of every argument for inward investment. Apart form the immediate danger to UK mfr of this narrow-minded and stupid attitude, what signal will it send to any 'inward investor' of the future?



GC

Products become more attractive when you know someone else also wants to buy. It confirms/reinforces the wisdom of your own decision.

For example, if Buffet buys into Goldman Sachs, others who were wavering will suddenly want some of the action too.

Hence the knowledge that the soveriegn wealth funds of Qatar and Abu Dhabi wanted to buy this stuff (albeit with sweeteners) will have changed its attractiveness to others.

I doubt that this phenomenon can be called upon to fully explain why these instruments should be regarded as having changed from "poisonous" to "highly placable" in less than a month.

But as I see it, it's the best line of defense for the managers at Barclays, who suddenly seem to have lined themselves up like ducks at a fairground shooting stall.

Remember the British Aerospace FUG,once again no surprise when you look at the players.

Time to EXIT Barclays. .

I'm all for a bit of symbolism! At least it shows some sense of contrition!

Would that the other architects of our doom showed some of the same....

Symbolism and contrition will at least satisfy the rising tide of bloodlust in the financial markets

UK plc is in no fit state to help itself-we have no option but to look elsewhere. GB probably already has the begging bowl out doing the rounds!

Glad you're watching this Robert. Good job !

Us ordinary punters are most unlikely to spot these goings on.

On Radio 5 Live this morning there was a piece on prostitution, and in particular the illegal offence of "living from immoral earnings".

I couldn't help but think of bankers in every sense!!

Begining to appreciate Alexander Curzon's frustration with BBC "management" of blog responses. I see my comment at #6 has been referred, presumably because I suggested RP had ulterior motives for continually banging on about Barclays. It's interesting how BBC employees can make critical statements of others, but responses in similar vein get blocked. Unlike AC, I've only had two comments blocked, both making specific criticisms of RP.

IF£300 million warrants value and commision is taken into account that ,would produce aproaching %16[real] interest

Which means they get back their piece of ponzi pie in the sky in six years, should Barclays still be arround .

Does the 17% tell us about expected likely inflation rates after the temporary pre tsunami drop in liquidity levels [deflation ]that we are now experiencing ?

Water wings and rubber dingies might be a good hedge for our antedeluvian oconomy

or am i being hopelessly optimistic ?

Robert such actions reeek of incompetence and not realising that teh notion of being a master of the universe went out over a year ago.
Unfortunately Barclays executives have shown they are not working in the right time zone.
There is a serious issue of competence and involved and double standards that are nothing short of outrageous.
Only in the UK do we stilll assume that things will get done on a nod and a wink.
Barclays management can't get real because it is in the culture to do things the Barclays way, however wrong it is.
When I read in the Telegraph headlines yesterday,"Back us or sack us" the answer is a straight no brainer. As Alan Sugar woud say: "You're fired and there is no compensation for loss of office or any perks that will go with you!"
Please don't think that they can't be replaced because the simple answer is they can forem a pool of 1000's who would accept a level of remuneration at 50% of what is being paid now and do a damn site better job.
I for one would offer my services and show all shareholers what it takes to get things right there because Barclays has lost the plot and is presently in panic mode which serves no one any purpose.
If any institutional or private shareholders want to get in touch I am ready to go in and sort things out.

Dear me, no wonder the shareholders are complaining. I would think that they should all be resigning. In the USA they might be worried about the legality of their actions

Just confirms my view that the global financial system remains a complete mess, with bankers and politicians thrashing about trying to fix it. I simply don't believe some of the soothing noises coming from various quarters, not least politicians, that would have us believe we're solving this problem.

Just think. If the bankers are making errors on this scale, imagine the sort of cock-ups now being engineered by our glorious political leaders - and being sold to us as considered economic policy decisions for the good of all mankind. My foot!

Let's see what happens with the auto industry next shall we? And which other industries are waiting in the wings to make their case for a taxpayer bail out?

This is madness.

My Immediate question for Robert to research arises from noticing how widely significant equity in our largest corporations, and not a little control, lies offshore.

What percentage of the equity of Barclays Group entities do Middle East investors own, both directly and indirectly?

Put bluntly, is there even a hint that the board decision may have been influenced by the interests of a powerful group of share holders who just happened to be also offerring to buy the RCI's?

Maybe it is the price for a positive vote in favour of the incumbent board members? Or a few islands in the Dubai Globe Resort a few years hence?

I think the problem is that Barclays went straight from offering a standard deal to shareholders, ie buy a share and get a dividend if we make a profit (not a certainty at the moment) for which there may not have been a great deal of enthusiasm, to offering some non shareholders a blockbuster deal, ie a guaranteed 14% + a warrant on share options.

I think that Barclays shareholders should be aggrieved that they were not offered the deal first and the scraps then offered to non shareholders.

It appears that a lot of directors seem to think that it is their company for whom the shareholders are an irritant for whom the minimum concessions must be made.

It doesn't seem like the board were acting in the interests of the current shareholders who lets face it are the owners.

If I were a Barclays shareholder my opinion would be that the position of the board was untenable as they have not acted with my interests at the top of their agenda.

We could do with a couple of these Saudi oil barons running the pension funds - they clearly know how to get maximum profit at minimum risk.

Plenty of Censorship today it would be good to see what these people are saying?

So moderators who are you to JUDGE??

# 8

Great post. I said something similar at #6 but it was blocked, I think because I suggested even worse ulterior motives to RP than you did. I didn't bother listing the nonsense in his blog above, as there's just so much. You've just done it for us all anyway! I'd just add one further point, though. RP (not for the first time) can't resist saying how he'd love to get 14% interest. What he fails to point out is that the ME investors are buying capital instruments that are by no means guaranteed against loss. We know that investors in this type of stuff have been toasted so far (Lehman's being the most obvious case), so there's a lot more risk for these guys than for mere mortals with a current account (ie backed by government guarantee). He also fails to make the connection that if, indeed, banks paid us all 14% on our deposit accounts, we'd all have to pay about 16% for our mortgages to make the economics work.

This comment was removed because the moderators found it broke the house rules. Explain.

This comment was removed because the moderators found it broke the house rules. Explain.

When you look a little deeper the figures look even more ridiculous than on the surface of this report.
Commissions paid were roughly 10% of the amount borrowed - so effectively Barclays borrowed £2.7bn having given back 10% of it immediately.
At 14% coupon for 10years they will give the investors £420mn every year for 10 years - or £4.2bn over 10 years.
On the £2.7bn which they actually got this 14% coupon is actually just over 15.5% apr.
After 10years assuming Barclays hasn't collapsed into government ownership in the mean time (or even assuming they have will HMG seriously want to annoy major oil supliers to this country by wiping this investment out?). They get their original £3bn back, presumably borrowed on the assumption that in 10years time raising that kind of capital will be easier.
Or for a 10 year loan of £2.7bn they get back £4.5bn.

Private eye have suggested that one reason is that this deal is offshored so the effective coupon is lower than the cost of borrowing from the BOE - if it was this straight forward surely the Barclays board could easily have defended the deal, curious they haven't if this report were correct.

You could of course be cynical about it and having noted that the option price multiplied by the number of warrants given
= £2.97bn. Startlingly close to the sum borrowed. So in principle the investors can at a time in the future when conditions have improved exercise their option - give Barclays £2.97bn - with presumably the boad seats such a substantial holding implies force the board to reimburse the RCIs (after all - presumably lending will be easier and at much lower rates at this time) so paying off high coupon debt and refinancing with lower coupon which makes perfect sense.
The investors then have a large stake in Barlcays which effectively has cost them nothing more than the risk on a short term loan. As a longer term strategic move where the objective is to gain substantial stake in Barclays this deal would look very attractive. If it was anything else would the warrants/option have been needed at all?

Is it possible that now it has Abu Dhabi and Qatar propping it up that Barclays has become less risky and that without that prop no one would have put the money into them?

To all Bloggers I urge you to contact the BBC re DELETION policy.

The POLICY??? NEEDS a RETHINK.

This comment was removed because the moderators found it broke the house rules. Explain.

This comment was removed because the moderators found it broke the house rules. Explain.

This comment was removed because the moderators found it broke the house rules. Explain.

# 23

As of yesterday, the largest ordinary shareholders in Barclays were Qatar Holding LLC, with 6.25%. Other major shareholders were Lloyds TSB with 5.01%, Axa (4.34%), and L&G (3.98%). The Lloyds, Axa, and L and G holdings will be in their investmetn funds, ie held on behalf of pension funds, people's ISA etc. It's just a quirk of the disclosure rules that these have to be included in the institutions' reports where they have discretionary control over how their clients' money is invested. So the Qataris already do have a significant interest in Barclays as you suspected. On the flip side, though, I'd point out that under 60% of Barclays business is actually UK-based. Barclays is a global business with a global shareholder base.

# 23

As of yesterday, the largest ordinary shareholders in Barclays were Qatar Holding LLC, with 6.25%. Other major shareholders were Lloyds TSB with 5.01%, Axa (4.34%), and L and G (3.98%). The Lloyds, Axa, and L&G holdings will be in their investment funds, ie held on behalf of pension funds, people's ISA etc. It's just a quirk of the disclosure rules that these have to be included in the institutions' reports where they have discretionary control over how their clients' money is invested. So the Qataris already do have a significant interest in Barclays as you suspected. On the flip side, though, I'd point out that under 60% of Barclays business is actually UK-based. Barclays is a global business with a global shareholder base.

Robert,

They needed £7,000,000,000 pdq. Not just the £500,000,000 that, all of a sudden, their incumbent shareholders were prepared to provide. (When they found the guts, after the event).

Job well done in my book. Let's compare share prices of Barclays, RBS and Lloyds in a couple of years' time shall we?

# 23

As of yesterday, the largest ordinary shareholders in Barclays were Qatar Holding LLC, with 6.25%. Other major shareholders were Lloyds TSB with 5.01%, Axa (4.34%), and L&G (3.98%). The Lloyds, Axa, and L and G holdings will be in their investment funds, ie held on behalf of pension funds, people's ISA etc. It's just a quirk of the disclosure rules that these have to be included in the institutions' reports where they have discretionary control over how their clients' money is invested. So the Qataris already do have a significant interest in Barclays as you suspected. On the flip side, though, I'd point out that under 60% of Barclays business is actually UK-based. Barclays is a global business with a global shareholder base.

# 23

As of yesterday, the largest ordinary shareholders in Barclays were Qatar Holding LLC, with 6.25%. Other major shareholders were Lloyds TSB with 5.01%, Axa (4.34%), and L and G (3.98%). The Lloyds, Axa, and L and G holdings will be in their investment funds, ie held on behalf of pension funds, people's ISA etc. It's just a quirk of the disclosure rules that these have to be included in the institutions' reports where they have discretionary control over how their clients' money is invested. So the Qataris already do have a significant interest in Barclays as you suspected. On the flip side, though, I'd point out that under 60% of Barclays business is actually UK-based. Barclays is a global business with a global shareholder base.

This comment was removed because the moderators found it broke the house rules. Explain.

Barclays? Abuse of other peoples money?

Now Theres A Thought!

Goodness me!

I have been referred to the moderators for

REeducation.

I have a personality flaw.

The Flaw must be corrected.

I must be exterminated.

I must face a Darlek.

I am a Darlek.

ZAP.

12 Guy Croft

Hi Guy,

It looks like a big walkaway by the government. The strategy seems to be to leap the gap and land on the upturn. Could well be leaping off a cliff. No upturn in sight. The scale of the problem could be major. Not heard anything sensible yet to deal with it.

Sadly, Robert's moderators are not of Robert's quality - they banned a posting of mine for using Latin and mediaeval Anglo-flemish a while back, simply because they weren't modern English - the trouble is, we were talking about old English so they were apposite. The lesson is, if blocked, repost less controversially.

Number 8, sjpepper - is that you Bob Diamond?

Erm, public-owned and privately managed bank seeks finance that doesn't put non-commercial constraints on it, limits shareholder dividends or bonuses.

Sorry, but Barclays dealings are for Barclays, their share-holders and the FSA to discuss.

The rest just sounds like sour grapes Robert because they wouldn't take the government schilling.

As #38 said,

Let's compare their share prices and profitability in five years time.

HEY THERE MESSRS GORDY DARLING & MANDELSON.

Ive just had the bank on the phone to say one of our customers has bounced a cheque for £1,837,562.93 pounds sterling.

Perhaps HMG would like to cover that one??


So its action stations to place them in Administration.

My oh my, lots of referred to moderator on this blog.

I wonder why that is?

#36
I recently suggested here that Barclays and British are mutually incompatible concepts. Perhaps the best approach might be to ensure they are unable to claim HMG support when things go pearshaped, as they doubtless will soon with this shower in charge.
So where are the global regulators when we need them? I'm talking about the World Bank/IMF, of course - but oh, how stupid, they're not really globally orientated, any more than the WTC are. Such is hegemony. And that's why the wheels are falling off fast.

27 jaypee28bpr

I had a block when I used the word manipulation so I just dont bother using it anymore. I understand that website operators are responsible for the content posted by individuals which would make somebody somewhere uncomfortable but it is a bit rich when some comments posted here become effectively news story topic headlines or reporting themes on the same host site a day or two later. Again and again points raised are proved valid. Sure there are spoofs and activists and spin doctors, but so what. You dont get those in boardrooms or the House of Commons backrooms do you.

Alexander, you've been watching too much Spooks!

Wow, the mods are strict today. All I did was suggest that Robert was annoyed he can't get the inside scoop at Barclays like he can at other banks. Not sure why it's been referred???

Barclays seem incomprehensibly incompetent - and these people are still deemed sufficiently competent to run a major Bank, by the regualtors - their licence should be suspended now.

Are there any standards of probity in business?

#46

Nope, I'm not Bob (or should it be Bod) Diamond. Wish I was - I'd be quite happy with his basic salary without any bonus.

48,

Did they charge you a 25 quid fee for that ?

Fascinating stuff. If Robert's analysis is correct, then it seems that Barclays have indeed been very wasteful with shareholders' money.

The real question is, was this just sheer incompetence, or was there some quid pro quo: some nice backhanders or (perish the thought!) hospitality aboard some nice yachts?

Probably doesn't make any difference to whether it's right to get rid of the board of directors, but might make a difference to whether there is any cause for legal action.

How about some good old fashioned investigative journalism to find out?

As before; we all need to complain regarding the Moderation 'POLICY'.

I have been stunned by the Censorship on these blogs.

rahere post 52

We dont do Television in our house,so its not down to Spooks.

Its down to REALITY.


No T.V. since 1980.

Marcus Agius should definitely resign. He's completely failed to do his job and act in the interests of shareholders. He's also on the BBC's board and I certainly don't trust him to look after the interests of licence fee payers.

Well there are a number of reasons:

Thanks to a nameless reporter - probably acting on what he was told by the treasury - the impression was formed that UK banks absolutely had to raise new capital. Also "early next year" is a matter of weeks away, which in a capital raising environment in this market isn't that long a period of time. If you run barclays you really want to be the guy doing a Dick Fuld - we had plenty of offers, we negotiated hard but in the end couldn't raise the money - or you want to play safe and fight another day. Of course they could have taken government money with the T&Cs on that cash changing depending on how GB and AD feel that day. I bet fast forward a couple of years when you look at HBOS-LTSB-Gosbank that BARCL won't look so stupid after all...

OK time's up on the foolish notion that these are "not normal times".

Normal is an illusion; change is constant. Our culture, planet, universe - and absolutely everything within it - is constantly evolving.

Those seeking to revert to "normal" are really seeking to rewind time to a previous state of the evolutionary system - and yet there is not a single documented instance of this ever occuring in the real world.

The past is the past; the future is different, and that's all there is to it.

Rather than wistfully pursuing an impossibility, today's decision-makers should instead be concentrating on forging a new state of existence based on reality as it has become, rather than what it was, or what they want it to be.

They are just humans, how can they tell what is the best system for now? Only the system knows that, and nothing will stop it shaping itself to match.

Claiming that these are "not normal times" is simply admitting that one's existing policy structures and belief systems and world views are inadequate to deal with the current state of affairs.

The answer to the problem is not to try and set reality back so that it matches the model. The answer to the problem is to adjust the model until it works with the new reality.

What that means for today's leaders is to stop wishing for yesterday, go back to the drawing board and come up with a sustainable model that can cope with the fluctuations observed.

Until this is done, there will be mere bleating for times gone by, while the real world tanks.

Why is anyone surprised that Barclays 4 Exec Directors will not take their bonuses this year?
At the rate their diluting everyone's holdings and the damage they do to the balance sheet by handing hundreds of millions offshore - they'd be worth about as much as 2 front-row tickets to a Gordon Brown financial management seminar anyway

Re 56 javaman 1984

I didnt ask,i was shaking with anger.

To give you an idea it will cost £8000.00 sterling to place them in administration.

My plan is to take them over and move into retailing.

A bit of backscratching going on here?

Barclays Executive - "If we give you a bit of an unnecessary sweetener here, will you see us right when we're chucked out of our jobs in the UK?"
Shady Sheikh - "Of course, old boy..." [educated at Eton, of course] "...would a percentage of the sweetener do, or would you prefer a seat on the board?"

Re javaman1984 post 56

I didnt ask about that,i was shaking with anger.

To give you an idea putting them in Administration will cost £8000.00 pounds.

My idea is to take them over and go into retailing,we make the stuff we might aswell retail it.

#8, again that's because he is an HMG Treasury mouthpiece. He only regurgitates what AD and GB give him.

My God,

you couldn't make it up.

Come on Robert - we're bored with this one now.
Surely GB & AD have given you the results of the Lloyds shareholder vote by now?

Robert’s article leads to other questions - the big picture.

The big picture being a cash rich investor (sovereign funds etc...) have no interest in investing in stocks (far too old school), it’s much more interesting to attach instruments to the balance sheet of the entity (such as barclays) which extracts any future value out of the entity to the holders of these instruments rather than the long term investors holding stock, thus creating an “upside neutral” situation for the share price.

You have to be seriously concerned about the future value of pension funds - as these new dynamics kick in to the capital markets.

Have just heard Robert on Radio4 advising that the recapitalising of the banks was never meant to start them lending again, but merely to stop them collapsing -

This isn't what I agreed to!!!

64,

Sorry mate, couldn't resist. Hope all goes well for you.

Hold on! We (the shareholders) haven't approved this deal yet.

Seems to me we shouldn't.

A rights issue with Qutar picking up whatever doesn't sell would be fair.

I wouldn't even mind too much paying them £300M in that case.

I'm voting against - if I can find out how to vote stock held in a Barclays Stockbrokers ISA!

alexandercurzon,

I have referred all of your off-topic posts to the moderators. You may of course refer this post to the moderators.

62, I agree with you. Seems that there are two old fashioned principles which are also still being yearned after by our "great" leaders....
1. That "controlled" information is good for us all.
2. That public confidence has no place in economic theory, yet will return to previous levels.
This time around, the internet has completely blown the power bubble of information.... and the public are no longer as brainless as we perhaps used to be.
This could be the first silent revolution. Welcome to Globalisation, where Fiat currency is supported by Fiat confidence. All very taxing indeed!

Can I repeat, this is all a result of the leveraging by banks to jump in to the investment market. They gambled with money that they did not have. Now UK PLC is trying to do the same. What a fiasco.

#70, these sort of instruments have been around for over 20 years. There existence is for a simple reason:

1) Equity is expensive to give away, there is only so much of the pie you can give away. On the other hand, it has some tax benefits for investor and also the common shares don't promise any specific payout. So this should be your last choice.

2) Debt on the other hand is not limited by amount but rather by what you can raise. It is more tax efficient as you can claim the interest payments as an expense - as opposed to dividends which must come out of post-tax profits. But you must make the payments or else and too much debt means your company gets downgraded.

So what you want are products that are sort of equity from a credit rating perspective but debt from a dilution and tax perspective. Hence these hybrid instruments, yet another financial market created by idiotic and arbitrary distinctions.

And your pension fund will be loaded up on them....

As for the specifics of the BARCL investment with a 14% coupon I will bet money there is some sort of conversion clause or it is callable - which means the debt can be paid back early if BARCL finds a cheaper funding source. Coupled with some nice tax efficiencies - which will knock 30% off the coupon paid in real terms - I am sure that all BARCL have really done is put a ceiling on their cost of capital.

#73, Mr RP seems to generally have problems with tenses....

https://www.newsroom.barclays.co.uk/content/Detail.asp?ReleaseID=1472&NewsAreaID=2

you'll vote on it in 6 days. You need to make sure you can vote your shares and they are registered with CREST in your name and not in a nominee account - of course there maybe some fine print in the ISA that doesn't let you do this as nominee accounts are cheaper for brokers. Never really worked on this side of the business so you should get expert advice...

What is the obsession with Barclays?

Is it not a good thing that they are (currently) standing on their own 2 feet and not looking direct taxpayer support?

If they have done a sub optimal deal then that is a shareholder matter.

It is wholly mendacious to seek to link this deal to a destruction of pension fund values. Pensions have been essentially destroyed by a multiplicity of events and policies over many years - one more or one less at this stage of the game is not likely to make much of a difference to aggregate pensions.

This plus the HBOS fandango is simply a regurgitation of Treasury political posturing.

The fact that they have time to spend on such trivia is probably instructive as to just how switched on they are with regard to the real problems - and just how likely it is that will ever adopt a straightforward truthful approach to anything.

I agree about the deletion policy. Surely this is a forum for comments, clearly from readers of Robert Peston, not the man himself? They have the standard disclaimer "Does not express the views of the BBC", etc on the site, so where's the harm.

At the very least, they should be "post moderated", not "pre moderated" and the criteria needs seriously relaxed.

We're not children, don't treat us as such or we'll find another outlet for our views!

I find it quite galling that the BBC, which covets and defends its right to journalistic freedom and free speech so closely feels it has the right to censor it's viewers!

This beggers belief .How can these directors continue in their positions .In the real world I would be sacked for this lack of judgement and clear panic .They are supposed to be the professionals in their field ? The investment funds of Abu Dhabi and Qtar must be have a good laugh at our expense .I am totaly disolusioned and confused.com !!!

This is light touch regulation, how can they do all these without government permission. Government has to do something about this, might be time to investigate for gross negligence and put few in prison.

Only one thing that hasn't been considered; how much new investors will be able to get back; probably next to noting at 14% interest rate.

# 77

To be fair to the brokers here, it's not actually their cost structure that is behind the use of nominee accounts in ISAs. Rather it is an Inland Revenue requirement to prevent tax avoidance within tax-advantaged wrappers like them (the same is true of self-invested pensions for instance).

I don't know what Barclays Stockbrokers policy is on allowing voting by underlying holders of stocks held in ISAs. I suspect they facilitate it but maybe make a charge. I use Barclays Stockbrokers for all my stuff, and they certainly allow clients to give instructions on corportate actions (rights issues, takeovers etc) in non-ISA accounts held through their nominee service. In any case, given the potential conflict of interest here, I'd be surprised if they wouldn't allow clients to vote on the Barclays capital raising and/or sacking the Directors. Might need a bit of pushing and speaking to people a few rungs north of the call centre, but I'll bet they've already got a contingency for this. I've found their stockbroking customer service to be pretty good. I don't work for Barclays incidentally, nor do I have any Barclays shares!

#59

No TV since 1980.

You missed 'The Office'. It was great.

You should buy a TV and switch to the comedy channel.

You could do with a good laugh. Being so angry and obsessive will kill you.

Yes - very interesting but I am not sure that Barclays are not just trying to find funds, but that something else is going on - they may be aware of trouble ahead. I agree with #12 that Banks have really become irrelevant they don't seem to be able to operate as a business to all intents and purposes they are just clearing Banks. I have said this previously on HYS comments because I think, ultimately, the big Banks are going to fail. How long can they keep on re-funding themselves before they have to open the door to the vault and see all the debt they are holding?

Think there's a typo in the 11th paragraph. It should read:

Perhaps unsurprisingly, although Qatar and Abu Dhabi were prepared to release £500m of the RESERVE CAPITAL INSTRUMENTS for sale to other investors - following complaints from British investors that they should have been offered these in the first place - the Gulf investors didn't give back any of the commission or warrants.

It sounds as if Knacker of the Yard should investigate.

However it would probably be pointless, because the feudal rulers of oil rich states are involved and so the DPP would rule that prosecution was not in the public interest, as it did in the BAE case. They might threaten to stop telling us about any of their subjects who might be planning a terrorist attack in the UK.

Interesting piece of research out today from JPMorgan on UK banks prospects, and courtesy to Barclays Stockbrokers for the summary. Per the Barclays summary:

"Banking profitability will not be the same for a long while, according to JP Morgan, which has issued a downbeat assessment of the prospects for UK banks.

JP Morgan (JPM) is sceptical over the government’s assurances that it will be an “arm’s length investor” and believes that “as the economy deteriorates the government is likely to be pressed to exert more influence.”

Though JPM confesses it does not know what impact the government’s involvement will have on earnings, it is assuming that there will be less significant margin growth in the low interest rate environment, while the fixed cost of writing business will be more expensive.

The US bank has cut its earnings estimates for the UK banking sector by 31% for 2009 and by 34% in 2010. It expects sector Return on Equity to fall in the range of 6-10%.

JP Morgan remains underweight on the sector and has reduced its price targets for the major players as follows: post-merger Lloyds Banking from 180p to 110p (pro-forma); Barclays (from 210p to 150p), Royal Bank of Scotland (from 120p to 50p) and HSBC (from 720p to 675p).

Lloyds TSB remains its least preferred stock in the sector, with HSBC the best of a bad bunch. JP Morgan believes the synergy targets after the Lloyds TSB and HBOS merger will be hard to achieve and capital shortages remain. The possibility of HBOS continuing as an independent entity is discounted, as the cost of preference capital and government debts guarantees, combined with rising impairments, would wipe out profitability.

Meanwhile Broker Panmure Gordon has also been sticking the boot into HSBC, dropping its rating from “neutral” to “sell” and scything its price target from 810p to 615p in recognition of the worsening global economic outlook. The broker observes that although it has avoided the need to ask for a government hand-out, its Tier 1 capital ratio has eased to 8.9%, which is below the 10% average for the European banking industry."

UBS has also been looking at European banks, and described earnings prospects for next year as "dreadful".

In short, anyone who thinks that any bank is currently a good investment probably needs a good shaking to help them wake up from their strange dream.

Since the future of such a major bank is an issure for so many beyond just the shareholders maybe when the Barclays shareholders meet the Board they will give some thought to telling them that they must stop DISPOSSESSING people in efforts to rebalance their books. There is more to banking than shareholders one might assume although you'd never guess reading this blog (an all the others).

A moratorium on repossessions and foreclosures etc etc, for say a year, to let people and firms sort themselves out. Not much fun being on the receiving end of that kind of thing.

No? Thought not. They all deserve it because they're irresponsible.



GC

Re deletions: Who are the moderators?

What is their level of education - media studies?

I suspect some posts have been removed simply because those concerned did not have a broad enough education to understand what was being said.

Re Barclays and the other Banks. It seems to me that they were never, as Robert said "Formidable Moneymaking Machines": they were formidable parasitic entities which syphoned off for themselves wealth created by others. Now they are worse: they stop the wealth being created to start with. They have become a cancer in the body economic which should be excised. We need simple banks to perform simple functions.

#2 "Another inciteful post Robert"

Did you mean insightful? The post is certainly inciteful - inciting Barclays shareholders to revolt that is! ;-)

From the BBC business pages:

Lloyds TSB shareholders voted 95.98% in favour of the takeover. They also approved plans to raise £5.5bn by issuing new shares and special preference shares.

#82, at the bare least as a shareholder he can turn up and make some noise and demand they explain themselves - just like we can with the government.

However, in all truth as a retail holder he isn't going to have much of a say - the institutions will yah or nay it and with 6 days to go the probability they don't already have it in the bag is pretty low.

"Many of us would love a bank to pay us that kind of interest"?

We all know that you are motivated strongly by the sound of your own voice, but to equate deposit rates with the return on quasi-equity is a pointless and misleading sound-bite of which you should be ashamed.

All these people knocking RP for publishing on this subject should realise that

a) the banking sector is the news

and

b) existing shareholders and institutional investors have been shafted by not being offered any sort of rights issue to begin with

keep it coming please Robert!

Something tells me Peston can't see the wood for the trees. Fair point on the commissions received , they do seem rather hefty. However, to suggest we as pensioners fret over GBP300m out the door is laughable in the context of the GBP42bn of Barclays' market value lost (and counting!) since start of year! Let's see, a fee recapitalise our bank and retain strength and independence going forward, or risk bankruptcy, hmm that's a tough one. Barclays shares already down 73% YTD; paying GBP300m is chump change.

Further, it appears Peson hasn't done his homework on the RCIs. The barclay's 14% RCI's are actually CHEAPER than the gov'ts 12% prefs AND don't come with ridiculous gov't strings attached. The fact is, these instruments are fully tax deductable for Barclays , making them a good 2-3% cheaper than taking up capital on the gov'ts terms. Barclays are being wise here in attempting to retain their independence. Boo hoo, shareholders get stuffed.. And?? ask N ROck shareholders what they would prefer? They can't have their cake and eat it too. Caveat Emptor.. If they don't like the terms then they, as existing shareholders, should've been willing to stump up the cash. Something tells me that was unlikely (hence the need to find a new outside investor!!). Barclays needed capital and needed it soon, and this is the result. And another point Peston, you moan us ordinary savers aren't getting these rates. But if ordinary savers want to be earning 14% , then they too can go to their broker and bid for outstanding prefs yielding anywhere from 10-27%. But then they too take that risk.

No. 76

Thanks for the lesson in debt and equity!

A loan which has a default risk of basically zero, with a yield of 14%, plus warrants giving 1.5 billion shares at £1.97 - this is having your cake, eating it, and coming back for more, just in case theres a bit more to syphon off.

Then just to add to the cocktail, make it all tax efficient so the exchequer can technically finance the deal.

This is cynically constructed to the detriment of shareholders and ultimately the british people.

I feel sorry for shareholders and UK tax payers.... thankfully I'm neither!

No. 89

******
..... formidable parasitic entities which syphoned off for themselves wealth created by others. Now they are worse: they stop the wealth being created to start with. They have become a cancer in the body economic which should be excised.

******

How eloquently put -- so true!

I have read all the comments.

Those contributors that complain about Robert Peston whilst ignoring the content of his articles deserve to be unpublished on the principle that fools alone just 'shoot the messenger'.

My background is not finance but I find Mr Peston's articles always informative, always educational and occasionally entertaining but more important well informed and written in an easy to understand style.

I read Mr Peston's and many other financial and economic blog sites to learn about financial matters and how to protect my very hard earned investments in retirement.

Smart ass Monday Quarterbacks leave Mr Peston to do his job, he is one of a few 'call it as I see it journalist' in a UK media full of political sycophants.

Those contributors that complain about Robert Peston whilst ignoring the content of his articles deserve to be unpublished on the principle that fools alone just 'shoot the messenger'.

My background is not finance but I find Mr Peston's articles always informative, always educational and occasionally entertaining but more important well informed and written in an easy to understand style.

I read Mr Peston's and many other financial and economic blog sites to learn about financial matters and how to protect my very hard earned investments in retirement.

Smart ass Monday Quarterbacks leave Mr Peston to do his job, he is one of a few 'call it as I see it journalist' in a UK media full of political sycophants.

How come top bankers can understand all this complex international finance, but dont understand that if they lend 500k on an ordinary little semi in Croydon they are probably going to lose their shirt.
It's the ordinary stuff that will break you.

I note that the Barclays board has offered itself up for re-election thus allowing themselves and their actions to face the scrutiny of the shareholders. Maybe Mr. Preston could tout this idea with his buddies in the upper echelons of The Labour Party!!!

The 14% may seem ridiculous now, but it may not in the coming years when the government is forced to raise interest rates to stave off the pound collapsing. Under Major interest rates went up to 15%. The bottom line is we either stop borrowing and reduce the debt, or we will be forced to offer ever higher interest rates to temp anyone to lend to us. Basically, we are between a rock and hard place.

Is there a floor with barclays share price when all this is is irrelevant as its been falling like a stone today.
Will the men in white coats be coming soon?