There's nothing wrong in a chief executive who is quiet and low profile, but John Varley has been low profile almost to the point of invisibility in the year he's been at the helm of Barclays. Yesterday he made his presence felt with a vengeance in a surprise management shake-up of the group's UK business which has understandably led to fears that all is not as it should be down on the farm.
Out goes Roger Davis, less than a year into what was meant to be a three-year turnaround strategy, and in comes Gary Hoffman, chief executive of Barclaycard. The newly arrived Deanna Oppenheimer is meanwhile upgraded to chief executive of UK Retail Banking. What can it all mean? Are there hidden nasties lurking in the undergrowth, which are about to be revealed to an unsuspecting world?
In truth, there appears no particular reason for nerves. The UK business has been underperforming for years, with virtually all the bank's growth coming from the investment banking operation, Barclays Capital. Yet the company appears to be meeting its promise to reduce costs and just recently there has even been evidence in the UK operation of a return to top-line growth, albeit modest in nature.
Even so, there's plainly much left to be done, and it was always a little bit doubtful that Mr Davis, who comes from the investment banking side of the group, was the man to do it. The press release is the usual guff about being off to pursue fresh challenges, and it is no doubt true that as a one-time pretender to the top job at Barclays, Mr Davis was becoming increasingly frustrated.
Yet the real story is that Mr Varley is stamping his mark on the business and moving his own people into the key positions. UK banking needs to show better progress than it has. Against the growth of the mighty Royal Bank of Scotland and the impressively robust performance of HBOS, Barclays looks lacklustre. If it wasn't for the sparkle being produced by Bob Diamond at Barclays Capital, the City would be demanding top down change.
Only one problem. The easy pickings of UK banking growth have already been taken. We are now into a much more difficult environment, with rising bad debt experience and more subdued consumer demand. It's quite a challenge that lies ahead.
Share tipping; not to be left to Slickers
Rightly or wrongly, the jury in the City Slickers trial has convicted the luckless James Hipwell, who like his partner in crime, Anil Bhoyrul, could have pleaded guilty on a lesser charge of market abuse and thereby avoided trial, but chose instead to protest his innocence. It didn't work, yet the question the jury must have found most puzzling of all is why the Mirror editor, Piers Morgan, wasn't in the dock alongside them.
Not only did Mr Morgan dictate the tone of the ludicrously "laddish" share tip column the Slickers wrote for the paper, but according to evidence heard by the court he also front ran one of the column's share tips. Front running is the practice of pre-buying the shares you are about to tip, knowing that once the tip is published, the shares ought to rise, enabling the front runner to make a profit. The practice has a long pedigree in the City which modern standards of probity have obviously failed to eradicate.
Mr Morgan didn't just dabble: in the case of Viglen, a technology company run by the entrepreneur Alan Sugar, the Mirror editor filled his boots ahead of a Slickers story about some ill-defined internet venture.
It was the height of the dot.com bubble, when the merest mention of involvement in the world wide web was guaranteed to add millions to a company's market value. In this case the effect was even more electric than usual, and happily for them (at least until the balloon went up), Mr Morgan, the Slickers, the Mirror lawyer, uncle Tom Cobleigh and all had bought shares in the company before the article appeared.
The Slickers claim Mr Morgan actually encouraged them to buy shares in their tips, on the grounds that this showed they were backing their own judgement. Massive naivity, or criminal abuse? Whatever the answer, to all the world it looks like the big fish has got away while the small fry is thrown to the wolves.
For what it's worth, Mr Morgan was not subpoenaed as a witness by either the defence or the prosecution, so we haven't yet heard his side of the case. He has quite a bit of explaining to do, not least to Department of Trade and Industry inspectors, with whom he was somewhat economical with the actualité according to court evidence.
Share tipping in newspapers is not in itself a disreputable activity. Attempting to make sense of why companies are valued as they are, and whether they might be mispriced, is a core function of the financial press. Yet with the Slickers column the game became just one of punting favoured stocks and entrepreneurs with made-up gossip and market tittle tattle.
The tragedy of it was that the column was deliberately set up as a way of bringing the excitement of stock market investment and money making opportunity, traditionally the preserve of the already rich and well informed, to the Mirror's working-class readership. The laddish, gun slinging and irresponsible style was meant to make it accessible. Yet by the time the working man got to deal in the shares, the price had already moved, the Slickers and their friends had made their profits, and like lambs to the slaughter, the readers were left buying only into the downside. All in all, a sordid little affair.
Rail franchises; just too pricey
Is that the sound of a gravy train coming to a shuddering halt? Stagecoach all but admitted yesterday that it had been railroaded out of the bidding for the Greater Western and Thameslink franchises because it was not prepared to pay the Treasury enough.
How things change. Not so very long ago these franchises were licences to print money as the Department for Transport gleefully stoked the boilers with as much taxpayers' subsidy as it was possible to provide. Now that the public finances are not looking so clever, the instruction from Gordon Brown to Alistair Darling is to save every penny he can.
That means franchises which command a premium payment are going for silly money while those that still rely upon subsidies are being won only by the operator prepared to sharpen their pencil down to the lead. James Sherwood's GNER raised the bar back in March when it bid the ludicrous sum of £1.3bn to ensure it retained the East Coast Mainline for a further 10 years. Nine months on, the projections of passenger numbers on which GNER bid look even more heroic than they did back then. Slowing economic growth means it will struggle to make the numbers add up.
It is a similar picture with those franchises which still require public subsidy, where some extremely aggressive assumptions have gone into the bidding process. Govia, a consortium between Go-Ahead and Keolis of France, was forced to ask for a lot less subsidy than other bidders to win the new Integrated Kent franchise. Perhaps it is just as well that Keolis is part of SNCF and so funded by the bottomless pit otherwise known as the French taxpayer.
Likewise, the winner of Greater Western and Thameslink will be the bidder who saves Mr Brown the most money. Perhaps that is as it should be. The Government has as much a duty to obtain value for money as anyone, particularly after the way the rail industry was sold for a song by the Conservatives a decade ago.
But it has to be careful this does not result in false economies. If a train operator hits the buffers because it has bid too high or accepted too little subsidy, it is not only shareholders who feel the pain. Passengers get clobbered too in higher prices and worse service, and they all have votes.Reuse content