COMMENT : Trafs manages to find another sugar daddy

'If Trafalgar's chequered past is anything to go by, Kvaerner is going to need all the hallucinogenic powers of a Viking magic mushroom to sustain it on this particular voyage into the unknown'

What is it that makes Trafalgar House, that bombed out old shipping, construction and property company, so persistently attractive? Having already fleeced one rich sugar daddy, Henry Keswick of Jardine Mattheson, Trafalgar now seems to have attracted the attentions of another. Kvaerner of Norway is plainly not in the same league as the Keswicks, wealth wise, but beggars can't be choosers, and as the passion fades for Jardines the best course for Trafs is clearly to move on to pastures new.

If Trafalgar's chequered past is anything to go by, Kvaerner is going to need all the hallucinogenic powers of a Viking magic mushroom to sustain it on this particular voyage into the unknown. Virtually to script came the coincidental news yesterday that the aptly named Cunard cruiser, the Sagafjord was drifting aimlessly in the South Seas looking for a tow, her engines beyond repair. If ever there were a timely reminder of the perils of investing in Trafalgar House, this was it.

None the less, Kvaerner seems determined to go for the nuptials. By all accounts Hong Kong Land, the vehicle for the Keswicks' investment in Trafalgar House, has all but agreed terms, the courtship arranged by SBC Warburg, which has a relationship with both sides. All that remains is formal Trafalgar House board approval. Kvaerner presumably has some idea of what it is letting itself in for. By a strange twist of fate, Kvaerner actually built the Sagafjord some 31 years ago. As one of the world's largest cruise ship builders, it knows a thing or two about the business.

Clearly, however, it is the engineering and contracting side of Trafalgar that interests Kvaerner most; Kvaerner believes that once in the saddle, it can make as big a margin out of the Trafalgar engineering businesses as it does out of its own.

In other respects too, Trafalgar could work for Kvaerner where it failed for the Keswicks. For a likely cost of around pounds 800m, Kvaerner is getting a business which has had pounds 630m of new equity pumped into it since the Keswicks first became involved. Admittedly, there's still a fair chunk of debt, but essentially Kvaerner is buying a refinanced company at what could be a knock-down price. All told, therefore, it looks a better deal for Kvaerner than Amec would have been.

It might be said that if Trafalgar is so attractive to Kvaerner, why is Hong Kong Land getting out. Trafalgar has not been a happy experience for the Keswicks; they have lost well over pounds 100m on the adventure and there was a risk that for them that the pill would turn more bitter still. Other shareholders can only thank their lucky stars for the Keswicks' misfortune; without them, Trafalgar would long ago have sunk beneath the waves.

Doubts grow over Barclays

Is Martin Taylor, Barclays' youthful chief executive, a fraud or a genius? The query hung over the bank's results presentation yesterday, as Mr Taylor beamed at the impressive pounds 2bn-plus in pre-tax profits while deftly passing over the line that showed underlying profits down by 5 per cent. Barclays is doing well, but that is not quite the achievement it seems when all the banks are making money hand over fist in the most sustained period of profitability for decades. The fact is that Barclays' performance, compared with that of the other major rival clearers, is poor and has been so year after year.

For the proselytising Mr Taylor, this is clear proof that Barclays alone is treading the path of banking virtue, while its greedy rivals are heading for another painful period in the hellfire of recession. When he assumed command at Barclays a little over two years ago, Martin Taylor made plenty of impact with his talk of New Age banking, stuffing the culture of growth and profligacy into a recession-proof hairshirt of abstemiousness in which quality comes before quantity. Fine. But has the cultural revolution really happened? Barclays' profits increase is largely due to a sharp fall in its bad debt provisions. This hardly amounts to a secular change in the quality of the bank. In the meantime, Barclays drops further behind its competitors in underlying earnings, while its costs show little evidence of control. Lloyds bank's costs grew by 4.4 per cent last year, but this was accompanied by substantial expansion; Barclays' rose by 5 per cent but it is shrinking, not growing.

Martin Taylor may yet be proved a visionary, but we shall have to wait until the next recession to find out. Having joined Barclays at its nadir, his claims have yet to be tested. But as the market showed yesterday, the doubts are growing.

How much more can Clarke give away?

Post-Scott, the political endgame continues to favour an election delayed to the last possible moment, in May 1997. Already, the political and economic calculations are turning to the next Budget and just how much Kenneth Clarke can give away.

Last November, the buzz in the corridors at Westminster was that the Chancellor had kept his powder dry. The modest pounds 3bn cut in taxes was seen as an opening instalment for the real bonanza - a decisive 2p off the basic rate of income tax, providing the Tories with the springboard for an election-grabbing pledge of a 20p basic rate.

A recent calculation by the National Institute of Economic and Social Research seems to support this view, suggesting the Chancellor has more room for manoeuvre than is generally appreciated. Mr Clarke could cut income tax in one fell swoop to 20p and the Public Sector Borrowing Requirement would still be lower in 1997/8 than the pounds 30bn it looks set to reach in the present tax year, according to the National Institute.

Everyone forgets Maastricht, however, and for all its Euro-scepticism the Government is as keen as anyone to meet its onerous criteria. Figures out today and next month will show how Britain has been progressing towards the all-important target of a financial deficit of 3 per cent or less of GDP in 1997. The National Institute projects that even a modest pounds 4bn tax-cutting package will put Britain on a knife-edge, with a deficit/GDP ratio of 2.8 per cent in 1997. Another reason for not over-estimating the size of a giveaway Budget in November - always assuming the Government can survive that long.

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
Joel Edgerton, John Turturro and Christian Bale in Exodus: Gods and Kings
Arts and Entertainment
Brendan O'Carroll as Agnes Brown in the 2014 Mrs Brown's Boys Christmas special
tvCould Mrs Brown's Boys have taken lead for second year?
Members and supporters of the lesbian, gay, bisexual, transgender (LGBT) community walk with a rainbow flag during a rally in July
footballLive! Chelsea vs West Ham kicked off 10 Boxing Day matches, with Arsenal vs QPR closing the action
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Arts and Entertainment
Jack O'Connell stars as Louis Zamperini in Angelina Jolie's Unbroken
film review... even if Jack O'Connell is excellent
Arts and Entertainment
Madonna is not in Twitter's good books after describing her album leak as 'artistic rape and terrorism'
music14 more 'Rebel Heart' tracks leaked including Pharrell Williams collaboration
Arts and Entertainment
Wolf (Nathan McMullen), Ian (Dan Starky), The Doctor (Peter Capaldi), Clara (Jenna Coleman), Santa Claus (Nick Frost) in the Doctor Who Christmas Special (BBC/Photographer: David Venni)
tvOur review of the Doctor Who Christmas Special
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

The Jenrick Group: Night Shift Operations Manager

£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

SThree: Trainee Recruitment Consultant - LONDON

£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

Day In a Page

A Christmas without hope: Fears grow in Gaza that the conflict with Israel will soon reignite

Christmas without hope

Gaza fears grow that conflict with Israel will soon reignite
After 150 years, you can finally visit the grisliest museum in the country

The 'Black Museum'

After 150 years, you can finally visit Britain's grisliest museum
No ho-ho-hos with Nick Frost's badass Santa

No ho-ho-hos with Nick Frost's badass Santa

Doctor Who Christmas Special TV review
Chilly Christmas: Swimmers take festive dip for charity

Chilly Christmas

Swimmers dive into freezing British waters for charity
Veterans' hostel 'overwhelmed by kindness' for festive dinner

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all