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.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
Lou Reed distorted the truth about his upbringing, and since his death in 2013, biographers and memoirists have added to the myths
musicThe truth about Lou Reed's upbringing beyond the biographers' and memoirists' myths
News
people
News
Ed Miliband received a warm welcome in Chester
election 2015
Life and Style
Apple CEO Tim Cook announces the Apple Watch during an Apple special even
fashionIs the Apple Watch for you? Well, it depends if you want it for the fitness tech, or for the style
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...

Ashdown Group: IT Manager / Development Manager - NW London - £58k + 15% bonus

£50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...

Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

£13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

Ashdown Group: Training Programme Manager - City, London

£40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...

Day In a Page

Armenian genocide: To continue to deny the truth of this mass human cruelty is close to a criminal lie

Armenian genocide and the 'good Turks'

To continue to deny the truth of this mass human cruelty is close to a criminal lie
Lou Reed: The truth about the singer's upbringing beyond the biographers' and memoirists' myths

'Lou needed care, but what he got was ECT'

The truth about the singer's upbringing beyond
Migrant boat disaster: This human tragedy has been brewing for four years and EU states can't say they were not warned

This human tragedy has been brewing for years

EU states can't say they were not warned
Women's sportswear: From tackling a marathon to a jog in the park, the right kit can help

Women's sportswear

From tackling a marathon to a jog in the park, the right kit can help
Hillary Clinton's outfits will be as important as her policies in her presidential bid

Clinton's clothes

Like it or not, her outfits will be as important as her policies
NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

Who's monitoring the outsourced NHS services?

A report finds that private firms are not being properly assessed for their quality of care
Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

How do Greeks feel about Syriza?

Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
From Iraq to Libya and Syria: The wars that come back to haunt us

The wars that come back to haunt us

David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

Too busy to surf? Head to The Pool

A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders
Heston Blumenthal to cook up a spice odyssey for British astronaut manning the International Space Station

UK's Major Tum to blast off on a spice odyssey

Nothing but the best for British astronaut as chef Heston Blumenthal cooks up his rations
John Harrison's 'longitude' clock sets new record - 300 years on

‘Longitude’ clock sets new record - 300 years on

Greenwich horologists celebrate as it keeps to within a second of real time over a 100-day test
Fears in the US of being outgunned in the vital propaganda wars by Russia, China - and even Isis - have prompted a rethink on overseas broadcasters

Let the propaganda wars begin - again

'Accurate, objective, comprehensive': that was Voice of America's creed, but now its masters want it to promote US policy, reports Rupert Cornwell
Why Japan's incredible long-distance runners will never win the London Marathon

Japan's incredible long-distance runners

Every year, Japanese long-distance runners post some of the world's fastest times – yet, come next weekend, not a single elite competitor from the country will be at the London Marathon
Why does Tom Drury remain the greatest writer you've never heard of?

Tom Drury: The quiet American

His debut was considered one of the finest novels of the past 50 years, and he is every bit the equal of his contemporaries, Jonathan Franzen, Dave Eggers and David Foster Wallace