Business view: Barclays spared a Spanish inquisition, but continental history is full of flops

About 13 or 14 years ago, the then chairman of Barclays, Sir John Quinton, was presenting the bank's annual results. Someone asked him from the floor of the meeting how much Barclays had lost that year in its troubled Italian operation.

"I don't recall," said Sir John, who then despatched a flunky to find a figure. A few minutes later he was handed a piece of paper. "The answer to that previous question about Italy is ... er ... £140m," he said.

A hand was raised. "If a bank, even such an international bank as Barclays, loses £140m in one of its businesses, don't you think that the chairman might be able to retain that figure in his head?" The question caused uproar.

More recently, when Martin Taylor was running Barclays, it made similar losses in France. The awfully clever ex-journalist, who famously studied Chinese at univers- ity, was cornered at a cocktail party by a shareholder. "Is French one of your languages?" he asked. "Yes," smiled Mr Taylor. "Well maybe you could use it to find out what the hell is going on down there."

Matt Barrett, the current Barclays boss, does not speak Spanish. He relies on what, Barclays was at pains to point out last week, is very good management at the bank's Spanish business. It had better be. Because having paid €1.14bn (£810m) for Banco Zaragozano, this rather curious asset will have to be worked hard to prove to shareholders that the money is better in the pockets of some colourful Spanish characters than used to buy back Barclays shares.

This is the logic of the Zaragozano deal. Barclays is doing rather well in Spain, thanks to a local version of the Open Plan account, which it inherited when it bought the Woolwich. The average Barclays Spanish branch has 1,150 customers and makes €360,000 of profit, while the average Zaragozano branch has 930 customers and makes just €186,000 profit. Bring that performance up to the Barclays performance and this deal is a bargain.

This all depends on operational synergies, which Lord Hanson described as being like a Yeti: "Everyone tells me they exist, but I've not seen them myself."

However, thanks to an assurance that Barclays isn't about to go hurtling into deals in bits of Europe it doesn't already know (such as Germany), investors are going to give this rather expensive deal the benefit of the doubt. But the implication is that Barclays may go fishing in parts of Europe where it already has experience – ie France and Italy.

Oh dear. Oh dear. Oh dear.

Who will be next season's Leeds?

At Stamford Bridge today, Chelsea could do one of two things. They could draw or win and qualify for the Uefa Champions League. Or they could lose and become the prime candidate to be the next Leeds United.

With something approaching £100m of debts, including a rather expensive £73m eurobond, the club's parent company, Chelsea Village, is in a tight corner. A few months ago it drafted in accountant Trevor Birch who, ironically, used to play for Chelsea's opponents tomorrow (and rivals for that coveted Champions League spot), Liverpool. In his few meetings with the City, mostly to mollify the bondholder, Mr Birch has shown he realises the constraints Chelsea are under and the need to cut the high player wage bill.

But the smell of the wintergreen does tend to get to people, and Chelsea's expensive band of multinationals are largely still together. If the team lose tomorrow, Mr Birch will have little choice but to launch a fire sale. Even if they win, he will have to cut back if he is to avoid the same problem coming up in 12 months' time.

The other candidate for the unwanted "new Leeds" title must be Newcastle United. The Toon have already qualified for the Moneybags League, but with over £50m of debts declared, even before they bought Leeds' Jonathan Woodgate for £9m, they should start being careful. However, the publicly quoted company still pays out an unaffordable dividend and Newcastle's well-respected manager, Sir Bobby Robson, is talking of spending upwards of £20m on players to try and make Newcastle the top club in England.

This sort of talk will scare the City no end. Followers of the financial car crash that is the football sector will only have to look back at the statements of Peter Ridsdale and David O'Leary, when they were chairman and manager of Leeds United respectively, to see what dangers lie ahead.

j.nisse@independent.co.uk