Margareta Pagano: If Jenkins wants our trust, he needs to say sorry

The Square Mile: After the latest bombshells, the Barclays CEO cannot expect to regain his bank's tattered reputation unless he says, and does, the right things. Plus: Footsie's joyful January leaves market watchers perplexed

Another day, another out-of-body experience at Barclays. On Thursday, the bank, along with the UK's other big three high-street banks, was ordered by the Financial Services Authority to review its sales of interest rate hedging products to small businesses dating back over a decade.

Then, on Friday morning, came the news that Barclays is also being investigated by the Serious Fraud Office and the FSA over fresh allegations that the bank lent Qatar money to invest in it as part of its cash-call in 2008 in order to avoid being bailed out by the Government. The SFO and the FSA are already probing the £7bn fund-raising but this new thread centres on allegations that Barclays lent money to Qatar to invest in the bank so that its sovereign wealth fund would be more willing to take a stake. To put it crudely, what this would mean is that, de facto, Barclays was underwriting Qatar's investment. If this were the case, Barclays would have undermined the security of that investment and contravened market regulations; that's serious.

Luckily, it took only a few hours for Antony Jenkins, the new chief executive, to realise the implications of this latest bombshell. Whereas his predecessor would have hung on until his finger nails were pulled out, Jenkins announced that he will forego last year's bonus.

That was the right decision, and he should be commended for doing it so quickly. But, even so, the timing of these fresh investigations are a body blow for Jenkins, who has been trying hard to rebuild the bank's reputation after the fiasco of the past few years. The biggest problem he faces is that the scandals just don't seem to stop coming and they are systemic. For all he knows, there may be more worms to come out of the can.

That's not something he can prevent but everybody – from staff to investors to the public – needs to see proof that the rot has stopped. He's in a difficult position – as head of the retail bank under Bob Diamond, it's unlikely he was privy to secret talks with the Middle Eastern investors. However, he would have known that the bank – along with its peers – went into overdrive to sell these absurdly complex derivative products to small businessmen and women who in many cases simply didn't understand them.

You can't blame Barclays for that, but you can blame them for the heavy-handed sales practices that the FSA has discovered all the banks were using, ranging from poor disclosure of exit costs to rewards being paid to sell the products.

Many of these hedging products were sold during the height of the financial crash when Barclays, and the others, were manipulating Libor, the price on which these derivatives will have been based. No wonder analysts say the compensation bill could run into billions.

Whether Jenkins likes it or not, he is part of that old culture. His cri de coeur that Barclays is changing will only be believed if he does something out of the ordinary. He's got his chance this week when he appears before MPs at the banking standards commission and should make a full public apology. Then Jenkins should try something a little more humble, such as visit some of the small business people who were sold these poppycock products.

He could start with Paul Adcock of Adcocks Electrical in Watton, Norfolk, who is paying £7,000 a month interest after being a sold an interest-rate swap by Barclays, the bank his family has used for a 100 years. That would show that Jenkins cares about restoring trust and is not just paying lip-service; words are cheap but action is gold. Who knows, it might even brighten up Barclays share price.

Footsie's joyful January leaves market watchers perplexed

So the gloomiest month of the year has finished with the best January performance of the FTSE 100 since 1989, its third-best start to the year since the index was launched in the 1980s and the highest monthly run since October 2011.

On the month, the index was up 6.4 per cent at 6,276.88.

Equally bright has been the performance of the FTSE 250 – seen by many as a more accurate picture of the UK's corporate health – which finished some 5.3 per cent higher at 13,030.49.

But why? It doesn't make sense at all, which is why the more cynical market watchers are so perplexed.

We know that prices are meant to be a guide to the future, that stock markets are usually about 18 months ahead of the economy. But even this argument looks sticky as price-earnings ratios look quite high and, long term, the economic fundamentals are not bright at all.

Volumes are also down by about 40 per cent on last year and running at only a fraction of what they were before the financial crash. This suggests buyers outnumbered sellers and that many of the big funds were underweight so had to top up in January to get ahead.

What we don't know is how much of the buying has been carried out by the high-frequency traders, those that operate in the dark liquidity pools and whose purchases don't show up in the market statistics.

Louise Cooper, financial analyst at CooperCity, finds the rally disturbing and that it can't be explained by some of the more prosaic reasons being given, such as an asset-allocation switch from bonds to equities.

Much more worrying for her is that share prices are being distorted by the quantitative-easing money being pumped into the economy and by the hope that the incoming Bank of England Governor, Mark Carney, will keep pumping.

If correct, she throws up a real problem because it takes about 20 years before we know whether central bankers have got it wrong.

Mr Carney will probably be the PM of Canada before we know whether or not he has got it right.

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