Outlook: A bungled sale if ever there was one

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Barclays is right to get out of investment banking, for plainly it has little talent for the fast-buck, wheeler-dealing attributes of this extraordinary industry. With negotiating skills of the type brought to bear on the disposal of BZW, it is amazing Barclays lasted as long as it did in the game. Nor is it any surprise that Martin Taylor, Barclays' chief executive, has been looking so frazzled of late. According to the rueful calculation of one disgruntled employee last night, BZW's equities and corporate finance arms were sold yesterday for rather less than half their annual revenues. That makes the investment bank probably Britain's cheapest company.

It is a terrible blow for Mr Taylor, whose cool, intellectual approach to business has been cruelly tested by the execution of this disposal. By general consent, it was the right deal but it came two years too late and was bungled disastrously. This is not a transaction likely to feature much in the promotional literature of Goldman Sachs, which handled the sale.

To put the price in context, Barclays is receiving about the same amount for the pretty substantial businesses it has sold to CSFB as NatWest paid for Hambro Magan, the little corporate finance boutique it snapped up recently during its own misguided foray into investment banking. While it could fairly be argued that NatWest was more than a little generous to George Magan and chums, the comparison is none the less an unflattering one. Despite its perceived problems, BZW is still a top-five player in British equity trading, corporate broking and equity research. The price achieved for this business is but a fraction of the amount spent by Barclays building it up from the mid 1980s onwards.

Earlier this year Barclays' share price was being talked up on the back of estimates that the investment bank could be flogged off for more than pounds 2bn. Admittedly, the bits CSFB finally bought only represent around a third of the whole of BZW, but even so this is a dismal price.

CSFB emerges as a real winner, catapulting itself into the European big league in equities and advisory work for a snip. It deserves real plaudits for the way it played its cards, waiting for its main US rivals to abandon the chase so that in the end it was able to dictate its own terms.

What now for Mr Taylor? A charitable view of the deal was that it was the least-worst option. At least Barclays has avoided pouring any more good money down a bad hole. But high-flyers have further to fall than lesser mortals. Mr Taylor will have to work hard to restore his star status in the City.