Venkat seizes the moment

Running an investment bank in parallel with a consumer finance operation is always a big ask. JP Morgan is the exemplar in the uS, but the jury is out on Barclays, which like much of the FTSE 100, suffers from a weak market capitalisation. Chief executive CS Venkatakrishnan, known as Venkat, has been struggling with the issue since taking the helm in november 2021 after the ignominious departure of Jes Staley.

Venkat, like Staley, has an investment banking background. He is personally frustrated that Barclays fails to reap credit for being the only full service investment bank in Europe which punches above its weight in the City and across the world. Moreover, for all of the ill-placed criticism of the subquality of earnings from bids and deals, debt issuance and trading, it has been a terrific generator of earnings for Barclays.

At a time when London’s financial sector is seen as having lost lustre, stakeholders should be grateful that Barclays is still standing. Credit Suisse has collapsed in far the most significant bank failure since the great financial crisis. Deutsche Bank has suffered from years of losses and its reputation as an investment bank to be trusted has been eroded. Barclays, in Venkat’s words, runs an investment bank that is ‘globally competitive, the biggest and most successful not domiciled in the uS’. His courageous plan is to rebuild confidence in a banking brand scarred by scandal and CEO changes, and to continue to grow investment banking but place more focus on everything else that Barclays does.

That means a big reorganisation, putting increased heft into wealth management (a parallel with goldman and uBS) as well as retail consumer banking on both sides of the Atlantic. Barclays has a recognised but tarnished brand and Venkat wants to restore the sheen.

in the effort to shift the bank’s valuation, he is proposing to sell a non-core payments arm, speed up cost cuts and reward investors. Tech and Ai make reductions in outgoings more possible.

There is a headline-grabbing pledge of returning £10bn to shareholders over the next three years in addition to a recent £3bn of buybacks. This has the extra benefit of reducing the amount of stock in circulation – always useful when there is such a big gap between the way the market values a company and the underlying worth of its assets.

Way to go.

What recession?

THE job of the Opposition is to keep the government on its toes.

Yet one cannot be alone in thinking that the glee with which Labour pounced upon data showing the uK in a mild, technical recession is unseemly, with the Shadow Chancellor Rachel Reeves declaring the uK is in a ‘spiral of economic decline’.

One understands that in an election year this might be regarded as fair game. But words and headlines have consequences.

Confidence is zapped, consumers don’t spend and businesses curtail investment plans. it is encouraging that Bank of England governor Andrew Bailey, who a year ago was forecasting the longest recession in uK history, conceded in Commons testimony that the slowdown is the most shallow since the 1970s. Office for Budget Responsibility forecasts, to be released with the budget on March 6, are expected to show a lively bounce back in 2024 and beyond.

The official arbiters of American recession, the uS Bureau of Economic Analysis, only declares such an event when the ‘depth, diffusion, and duration’ of decline can be shown. QED.

Easy kills

AS CuRRYS’ largest shareholder, with 14.6pc of the equity across all its funds, Redwheel is going to have a big say in what becomes of Britain’s last free standing electronics retailer. it backs the board’s decision to firmly reject the first passing shot from Elliott Advisors (uK).

Redwheel expresses frustration that uK asset managers are choosing to reallocate holdings to uS equities where valuations are historically high with poor returns. This leads to a doom loop which causes depressed valuations on the FTSE 350 and makes the City a happy hunting ground for overseas predators. That much we know. Redwheel calls for unspecified action by the uK authorities to incentivise investors.

Abolishing stamp duty on share trades might be a start but easing the tax regime on dividends and capital gains could be game changers.

Are you listening Chancellor?