Companies in the news ... and how they were assessed
Barclays: old bogies, new opportunities
Barclays scored “a significant victory” over the Serious Fraud Office in May, when the Crown Court threw out charges arising from its Qatar fundraising during the 2008 financial crisis, said Jasper Jolly in City AM. But the bank isn’t out of the woods yet. Determined to continue pursuing the case, the SFO has now applied to the High Court “to reinstate all of the charges dismissed by the Crown Court”. The SFO alleges that Barclays greased the £11.8bn emergency cash call with a £2.3bn loan to the state of Qatar, which was allegedly used illegally to prop up the value of Barclays’ shares – in effect, lending to itself. Four of the bank’s leaders at the time, including former CEO John Varley, face a separate trial in January 2019. The fundraising allowed Barclays to escape the fate of rivals RBS and Lloyds, which were forced into government bailouts. And a decade on, Barclays is still facing “repeated calls either to spin off or shrink” its “casino” investment banking arm, said Rosamund Urwin in The Sunday Times. That looks a mistake. Without Barclays, “global capital markets would be the preserve of the five big US banks”. Amid “global political turmoil”, Britain needs an investment banking heavyweight. “Barclays is our only candidate.”
Fiat Chrysler: after Marchionne
The sad news that the Fiat Chrysler Automobiles boss Sergio Marchionne has died, after suffering serious complications following surgery, has put the car giant “on the road to uncertainty”, said Philip Willan in The Times. Investors “reacted with dismay” as they digested the news that one of the industry’s most visionary and charismatic bosses will no longer be at the wheel. Marchionne rescued FCA from collapse in 2004 – later repeating the trick when he “drove a merger with Chrysler”, as the US carmaker “teetered on the brink” after the financial crisis. The new man in charge, Mike Manley – a Briton who previously headed the group’s Jeep division – has big shoes to fill, said Lisa Jucca on Reuters Breakingviews. During his 14 years at the helm, Marchionne turned “a troubled regional automaker into a debt-free global player”. But he will also be remembered for “boldly challenging rigid labour rules and providing a new model for productivity” – an approach that earned him the moniker “Italy’s Thatcher”. With that “reformist legacy” now “under pressure from a new government hostile to global business”, we can expect his British successor to be even “less sentimental” about the home country.
Sports Direct: keeping it in the family
Profits have been plunging at Sports Direct, but that hasn’t stopped founder Mike Ashley from flying in the face of corporate governance – again, said Jim Armitage in the London Evening Standard. Having hired his future son-in-law, consultant Michael Murray, to manage the group’s sprawling property portfolio two years ago, Ashley now proposes paying him a “jaw-dropping” £5m fee based on how much “value” he has created. Because Murray is not on the FTSE 250 firm’s board, there is no requirement to explain in detail how that value is measured. “It’s all so shabby” that even Murray, 29, “seems slightly bashful” about the arrangement. He has volunteered to reduce his fee. “That suggests he’s still got a lot to learn from his girlfriend’s dad: most notably, the art of not giving a toss what anyone else thinks.”