Barclays must show steel
AS euRope’S only sound global player in corporate and investment banking, Barclays holds a special place in the City.
last year its uK banking team was instrumental in securing the £30bn deal by Comcast for Sky and the £14bn merger of Randgold for Barrick Gold.
It comes out top for investment banking fees earned in Britain and has an excellent trading and deal making franchise in the uS as a result of the takeover of the American arm of lehman a decade ago.
Corporate raider ed Bramson is determined to unsettle Barclays just as it is emerging from the shadows of the financial crisis. He wants Barclays out of investment banking and concentrating on its consumer brands. These include Barclaycard and use less capital than investment banking. He fails to recognise that retail banking is a crowded space with lloyds having a dominant market share, Royal Bank of Scotland on a growth path and newcomers, such as metro Bank, offering superior services.
His timing is barmy too in that he wants Barclays to focus on the consumer when unsecured credit is at record levels.
Having failed to bully a robust Barclays board into giving him a seat at the table, Bramson is seeking to take the fight directly to shareholders at the company’s annual meeting in the spring.
Depressingly, some uK long funds, including Aviva Investors, are backers of Bramson. They should recognise that his real motive is quick profits rather than the longer-term interests of Britain, as investors in electra investment trust among others could testify.
Bramson must be shown the door. Grocery disrupter THAT Aldi and lidl have become real forces in British shopping is indisputable.
But anyone looking for guidance on the broader grocery picture has to take the Christmas numbers from Aldi with a pinch of salt.
It reports sales in the week commencing December 17 were up more than 10pc on a year earlier. It would be surprising if income was not up given that it operates from 827 stores, an increase of 65 from a year earlier.
Indeed, in reporting its seasonal sales Aldi is engaged in as much as a promotional exercise as anything else.
As a German private company it is excused from breaking the sales down into categories and fails to provide the like-for-like sales measure that is standard in retail.
Fresh insight into the Aldi model is provided by evidence to the Competition and mergers Authority on the proposed £15bn tie-up between Sainsbury’s and Walmartowned Asda. Aldi disclosed it is able to offer lower prices than the other grocers because it has a narrower range of 1,800 lines. This makes for a less complex supply chain and simpler logistics.
The German firm’s goal in the uK is to offer customers a 15pc discount on the lines it stocks compared with current prices at the Big Four supermarkets.
Aldi’s concern about the Sainsbury’s-Asda deal is that the 10pc price cut promise of the new supermarket behemoth would make the other grocery chains vulnerable to supplier price increases and a less good deal for the consumer. Aldi might get a better hearing if it provided forensic detail about its operations rather than its skill in flogging mince pies and prosecco. Oncology recruit THe race to become world leader in cancer treatments is on in earnest. American drug maker eli lilly is taking an £6.3bn gamble on buying loxo oncology. emma Walmsley at Glaxosmithkline recently splashed out £3.9bn on oncology biotech outfit Tesaro and has taken on San Francisco R&D guru Hal Barron to help push into the immunology space.
AstraZeneca, which has a head-start with immunology treatments, is upping its game by separating oncology into a separate unit looking at both early stage and late implementation treatments. It has recruited Jose Baselga, one of the world’s leading cancer specialists, to head the unit.
Baselga became available after he resigned from the memorial Sloan Kettering Cancer Center in new York following controversy over his failure to disclose commercial connections with pharma companies in academic papers. He has corrected the record and AZ chief executive pascal Soriot believes he is the person to drive forward the group’s R&D for oncology and bring late stage medicines to market. Baselga’s recruitment looks a risk worth taking.