The New York attorney-general’s complaint against Barclays over the way it ran its dark pool seems to contain clear evidence of institutional investors being misled about the amount of “toxic liquidity” provided by high-frequency traders.
More broadly, however, it raises the question of how the original purpose of dark pools – to allow institutions to make block trades away from public markets where they would move the price – was subverted by investment banks. Read more
A speech by Lionel Barber, Financial Times editor, at Hughes Hall, University of Cambridge, May 1, 2014. An accompanying video can be viewed here.
Ladies and gentlemen, distinguished guests, I am delighted to be here tonight at Hughes Hall in the University of Cambridge. This is the prestigious City lecture, but sadly I will not be providing slides. As Lord Acton might have said, power tends to corrupt, PowerPoint corrupts absolutely.
Tonight I want to talk about bankers and banking. These days, bankers are widely viewed as greedy, self-serving, amoral or actually dangerous. Estate agents, even journalists, are held in higher regard.
This past week’s kerfuffle over bonuses and remuneration at Barclays and Royal Bank of Scotland is a reminder that bankers continue to be held responsible for the financial crisis and the economic calamities which followed.
Bankers appear to be living in a parallel universe, where the rewards are far out of kilter with what the rest of society can expect. This speaks to a deeper unease about inequality which explains the unlikely best-seller on economics, Thomas Piketty’s Capital in the Twenty-First Century.
My questions tonight are: Can bankers mend their ways and their reputations? Is there a path to rehabilitation? Read more
Managers are notorious for prioritising short-term demands when they clash with long-term goals. Research in the US has shown that most executives would shy away from a value-enhancing long-term project if it caused them to miss a quarterly earnings forecast.
How companies can manage such clashes was the subject of a “Strategy Live” debate organised by the Financial Times in London this morning. Chaired by management editor Andrew Hill, the session featured senior figures from finance and industry, who spoke on a non-attributable basis under the Chatham House rule.
Participants used the example of Barclays to launch a broader debate, examining its controversial decision to increase bonuses to its investment bankers even as it – seemingly paradoxically – tried to move to a less abrasive, more long-termist culture. Read more
Antony Jenkins’ efforts to change the culture of Barclays by cutting bankers’ pay are on hold. At its investment bank, it is paying bonuses that are 13 per cent higher to “compete in the global market for talent”. The bank’s chief executive wants to reform the pay of US and Asian investment bankers but it is beyond his contro
You’re about to hear a lot more about “good banks” and “bad banks”. The report from the parliamentary banking standards commission, due on Friday, and Stephen Hester’s departure from Royal Bank of Scotland will reignite questions such as whether RBS should be split into “good” and “bad” operations (Mr Hester opposed this).
Running in parallel is a philosophical debate about how you ensure banks are “good” – in the sense of having a strong, positive purpose.
But there is also the question of whether banks that do good are always good banks. Read more
Antony Jenkins, Barclays’ new squeaky clean chief executive, is winning good reviews today for his attempt to turn his back on the “aggressive, short-termist” regime of his predecessor, Bob Diamond.
That includes shutting down the bank’s controversial, but very profitable, tax avoidance unit. Conveniently, the announcement coincides with an example of what exactly this unit was doing.
BNY Mellon Bank has just, very expensively, lost a tax battle with the US authorities over an extremely complex swap arrangement dreamed up by Barclays. The judgement will cost the US bank about $850m. Read more
Simon Fox of Trinity Mirror, the UK newspaper and publishing group, is the latest chief executive to attempt to give a restructuring plan a sense of focus, simplicity and unity by attaching “One” to the company name. “One Trinity Mirror” – which unifies the regional and national newspaper divisions under a “flatter, more efficient management structure” – follows in the footsteps of One Ford, One Siemens, and One Anglo (at Anglo American), to name just a handful.
I prefer the “One” theme to some of the other names applied to past restructurings. Among my least favourite: “Shape 2012″ at Metro, the German retailer (“Pear-shaped 2012″ would have been more appropriate, as one observer pointed out ); Reuters’ “Fast Forward” – a scheme that predated the Thomson merger and led to mordant humour among the newly redundant about having been “fast-forwarded”; and law firm Linklaters’ “Project New World“, with its sinister Aldous Huxley overtones. Read more
There is a contradiction at the heart of legal actions piling up against large banks, including Barclays, for distorting Libor. Half the plaintiffs are complaining that the rate was kept too high; the other half that it was kept too low.
One lawsuit filed in New York by Berkshire Bank in July accuses the Libor-fixing banks of hurting lenders by artificially depressing the lending rate. As the Wall Street Journal reported:
The lawsuit effectively argues that the alleged manipulation short-changed lenders by helping borrowers pay less for mortgages and other loans.