Barclays shares surge on resignation of chairman
Monday 02 July 2012
Barclays shares surged more than 5% to the top of London's leading shares index as investors appeared to back Marcus Agius's decision to resign as chairman.
After a volatile start in early trading, the blue-chip stock, which was hammered last week after Barclays was fined £290 million for rigging a key interbank lending rate, settled around 8.1p higher at 170.8p.
The bank saw around £3 billion wiped from its market value last Wednesday after the FSA published its report into the Libor-fixing affair, fuelling fears over the cost of the scandal.
Neil Shah, global head of research at Edison Investment Research, said Barclays' “bloodletting” with the resignation of the chairman sends out “all the right messages”.
He said: “It is vital that the next chairman is someone who is an expert in financial services but ideally not a banker him or herself in order to provide some extra perspective for the executive board.”
Other banking stocks were ahead after fluctuating throughout the morning with Royal Bank of Scotland up 0.4%, HSBC ahead 2% and Lloyds Banking Group up 2%.
Ian Gordon, analyst at brokers Investec, urged investors to back Barclays chief executive Bob Diamond and take “full advantage” of Barclays' recent share price under-performance.
He said “Bob is going nowhere” and added that it was still unclear whether Barclays “successfully” manipulated the Libor.
He said the investment arm, Barclays Capital, needs “radical action” to pull down its “bloated” cost base and the Libor revelations may ironically exert pressure on pay excess.
He added that the “unquantifiable” litigation risks are being seen as a multi-bank issue rather than Barclays-specific, which should help Barclays stock.
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