Monday, May 12, 2014

CBI Predicts Early Interest Rate Rise

The Confederation of British Industry (CBI) has warned that, because of rising house prices, the Bank of England may have to raise interest rates in the first three months of next year, before the general election, as opposed to the third quarter previously forecast.

This of course may be all very well if:

1 There were not a general elction in the offing, and

2 The price rises were not mainly be fuelled by London prices.

As such the Bank of England will defer any rate rise until after the election.

Thursday, May 08, 2014

Barclays - The Bad Bank

Barclays has increased its redundancy target this year to over 14,000, with 7,000 set to go from Barclays Capital (the current headcount of Barclays Capital numbers 26,000).

The redundancies are aimed at cutting costs and, more importantly, reducing the proportion of risk assets used by the investment bank.

A "bad bank" (non core division) will be set up to handle the process of shrinking the bank and £115BN of risk assets.

Wednesday, May 07, 2014

The Co-op's Ruinous Failure of Governance

Lord Myners has written a damning report on the governance of the Co-op Group, and has warned that unless it undertakes radical reforms "very soon" it risks being dismantled.

Lord Myners said that the Co-op needed to urgently create a professional board, and warned the organisation could not continue with its "deplorable governance failures" and had to address a "democratic deficit" that allowed a small elite at the top to run the business.

Lord Myners has also proposed the creation of a new 50-strong National Membership Committee to provide oversight of the top body, and the extension of voting rights to all individual members of the Co-op:
"I would say that the group board and many of the regional boards are still stuck in denial over this near ruinous failure of governance, whereas the vast majority of ordinary members feel justified anger. Radical decisions on governance structure need to be taken very soon - and with resolution - if the Co-op, as my mother knew it, is to be saved." 
However, in order for his report to have some beneficial effect for the Co-op and its members, his recommendations need to be approved by a vote of the 600 "elected members".

The question is, will the Co-op turkeys vote for Christmas?

Tuesday, May 06, 2014

Barclays' Investment Bank Profits Fall

Barclays' investment banking division saw Q1 earnings fall from £1.31BN in 2013 to £668M in 2014. This fall was largely as a result of a 41% fall in fixed income, currencies and commodities profits.

However, by the magic of accounting, pre tax profits (on an adjusted basis wherein movements in the value of the bank's debt are stripped out) fell only 5% to £1.69BN.