David Prosser: Barclays board wins a stay of execution

Outlook It used to be the Midland that claimed to be the listening bank. Now Barclays is laying claim to the slogan, yesterday unveiling a package of concessions it hopes will be sufficient to appease institutional shareholders that have threatened to derail its Middle Eastern fund raising.

Chief executive John Varley and his colleagues have stopped short of apologising for their actions, but their decision to waive all rights to a bonus this year can certainly be read as a mea culpa. So too the announcement that the whole Barclays board will stand for re-election at the AGM in April, a move that might be characterised as "Sack us in a few months' time if you want to, but don't kill the bank by vetoing our fund raising".

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At first sight, the concessions do not appear to go far enough. The angry institutions will now be offered a small slice of those lucrative 14 per cent coupon debt instruments originally reserved entirely for the Abu Dhabi and Qatar investors. But they won't get any of the warrants also being made available to the Middle East, and the issue of pre-emption still remains. Then there's the cost of the issue – those whacking commissions being paid to arrangers.

No wonder that none of the corporate governance bodies that have attacked the capital raising were backing down yesterday. Pirc continues to recommend shareholders vote against the proposals next week while the more influential Association of British Insurers has put the vote on "red-top" alert, its gravest possible warning of concerns about this sort of corporate action.

That said, Barclays will now almost certainly get clearance for its scheme. Not because shareholders have been won over, but because this is now the only game in town.

Note that the ABI was at pains to make it clear that its red-top rating did not constitute a recommendation that shareholders vote no. It probably had one eye on the statement given by Alistair Darling to the House of Commons on the terms of the Government's bank recapitalisation scheme. The Chancellor dropped a pretty heavy hint that Barclays, having spurned the offer of Treasury funding once, might not get a favourable response were it to be forced to ask for a handout after all.

You can also expect Mr Varley and the Barclays chairman, Marcus Agius, to survive what will in effect be a confidence vote in April, along with the rest of the board, though it will be interesting to see what the ABI, Pirc and others have to say on the matter.

How long the pair can go on running the bank, however, is another question entirely. As Barclays ought to know well, from its sponsorship of football's Premier League, once public votes of confidence in a management become necessary, the writing is on the wall, however fulsome the public backing might be.

Messrs Varley and Agius had a narrow escape last year when Barclays lost out to RBS in the race to snap up ABN Amro. This time, however, they may have run out of luck. Shareholders like to remind managers suspected of arrogance who actually owns the shop, and it's going to take some pretty impressive bridge-building to get past this row.