Barclays Share Discussion Threads

[bernie37] 26/9/2018 13:17

The Irish economy will grow by nearly 9% this year and by 4.5% in 2019, but only if the UK manages to strike a Brexit deal with the European Union, according to a new forecast.

Ireland’s Economic and Social Research Institute (ESRI), a government-funded but independent thinktank, said on Wednesday (26 September) that strong consumer spending and a decline in imports would help make the country the fastest-growing economy within the eurozone in 2018.

The ESRI noted that, because the outcome of Brexit negotiations is the most substantial risk facing the Irish economy, its revised 4.5% forecast for 2019 was contingent on the UK coming to a European Economic Agreement with the EU.

However, it said that it was “prudent to assume that a no-deal outcome is a real possibility.” Such a scenario would see Ireland “confronted by a highly adverse economic shock,” the forecast notes. It also warns that international trade tensions, such as US tariffs, could have negative implications for Ireland.

While the country should ideally run budgetary surpluses, the ESRI says that infrastructural deficits in Ireland, such as in public housing, require “significant investment.” Ireland’s upcoming budget should thus be a “holding budget” and should not look to either inflate or deflate the economy, it advises.

Despite a continued decline in unemployment—more people are employed in Ireland than ever before—the country’s agricultural sector has seen declines. Because this sector bears a “considerably higher share of exposure to potential Brexit fallouts,” it may continue to experience “disproportionally larger” job losses in the future, the forecast warns.

The revised forecasts, of 8.9% for 2018 and 4.5% for 2019, are based on stronger-than-expected consumer spending and investment in the country in the first half of the year. Some multinational firms had also significantly reduced their imports of research and technology-related services, which had a positive effect on Ireland’s trade balance.

[drylatt] 26/9/2018 12:18

JOHCM's Savvides blames Brexit for big banks' drag on £1bn UK Dynamic fund
Poor performance from Barclays and Lloyds last month

Alex Savvides, co-manager of the £1.1bn JOHCM UK Dynamic fund, has said Barclays and Lloyds Banking Group are suffering from the potential negative effects of a hard Brexit, with both banks dragging on the fund's performance in August.

Savvides, who developed the fund and has run it for the past decade, attributed part of the fund's underperformance from stock selection to high conviction holdings Barclays and Lloyds (a top ten holding at 3.8% of the fund), which collectively detracted 30bps from returns.

The manager said the response by shareholders to the UK banks' interim results in early August was "extremely underwhelming", describing the poor performance as "both odd and unreflective of the underlying reality".


"Interim results for both Barclays and Lloyds were good at the beginning of the month, with both companies tracking slightly ahead of expectations at this stage," he said.

"Indeed, Lloyds raised guidance for both full-year net interest margin and capital generation. The market's response in both cases was extremely underwhelming, despite the positive backdrop of a further interest rate rise in the UK.

Savvides said while there could be other contributing factors, such as Lloyds being linked with an acquisition of M&G - since denied by the company - and Barclays increasing cost guidance for the second half, concerns regarding a hard Brexit were more likely to blame.

Lloyds targets pensions and financial planning as part of three-year strategic plan

"The reality is, though, that both companies are suffering from the potential negative effects of a hard Brexit. Why else would you sell shares in companies that are trading on single-digit P/Es and deep discounts to book value, in the case of Barclays, or a near 6% yield - while upping capital generation guidance - in the case of Lloyds?"

The fund fell by 2.14% during August, although was up 16bps against its benchmark, the FTSE All-Share Total Return index, according to JOHCM.

Over three years, the fund is up 43% compared to the 29.9% rise in the IA UK All Companies sector, FE data shows.

[drylatt] 26/9/2018 12:17

Debate: Are British high street banks a good opportunity for investors at the moment?

Richard Buxton and Jon Cunliffe

Debate: Are British high street banks a good opportunity for investors at the moment?

Yes – Richard Buxton is chief executive and a fund manager at Old Mutual Global Investors.

As a long-term investor in UK banks, the most recent reporting season came as a welcome relief.

The litany of conduct charges and regulatory changes that have hampered the sector are finally starting to ease. Although we’re not completely out of the woods, an end is in sight.

With focus returning to the business of banking, the underlying profitability of the sector is becoming more obvious.

Outside of regulatory pressures, the macro environment is also turning in favour of the sector. The downward pressure on interest rates brought about by quantitative easing (QE), which was a necessity for economies during the financial crisis, severely hit the banks’ ability to generate interest income, and therefore profits.

At long last, QE is close to being wound down. There is also upward pressure on interest rates, pushing up inflationary expectations.

Indeed, many of the headwinds that have blighted the sector are ceasing, and are even turning into tailwinds.
No - Jon Cunliffe is chief investment officer at Charles Stanley.

Over the years, the British banking sector has grappled with non-performing loans, higher capital requirements, and legacy issues.

While these are problems that are now being addressed, we are still slightly concerned about sluggish UK growth, which may begin to weigh on both revenue generation and the credit quality of the big banks.

Other challenges facing the Big Four include regulatory pressure and increasing competition from challenger banks, while the continued low level of interest rates is likely to subdue net interest margins.

This is likely to be exacerbated by maturing loans from the Bank of England’s Term Funding Scheme, with banks expected to repay the money they borrowed by 2022.

It is the banks that are not entirely UK-focused that look the most promising from an investment perspective. Our preferred stock in the sector is HSBC, which has exposure to growing affluence in Asia and higher US interest rates.

[m1k3y1] 26/9/2018 11:42

bernie
I can't help but wonder whether Staley commissioned this article himself !

There is very little (if anything) here about his vision for the future, how he can achieve substantial returns for shareholders or where the bank will be this time next year.

All we are getting is the same old mantra we have been hearing for years and years.

"I believe you’ve got to have the team to execute and deliver strong returns for your shareholders" and "It’s going to take a while.”

Really, is this the best he can do........it's very poor to say the least.

[bernie37] 26/9/2018 11:33

Barclays boss Jes Staley telling the world that the humble credit card poses a bigger risk to the bank than Brexit, the rise of nasty nationalists, Trump, the risky leveraged loans, anything in fact; it feels a bit like a habitual drunk driver warning of the dangers of going out on the road after a skinful.

This, after all, is the man in ultimate charge of Barclaycard, one of the world’s top credit card companies.

Of course, you have to consider the context, and the audience Mr Staley was seeking to reach, through the interview with Bloomberg in which he made the comments.

Barclays is in the midst of a fierce debate over what it should be.

Prominent on its shareholder register is Ed Bramson, a so called activist investor with a chunky stake and the habit of making a lot of noise. He’s agitating for the business to change course and scale back its investment banking ambitions.

Mr Staley, an investment banker by trade who made his name at JP Morgan, wants Barclays to sit alongside his old shop and the likes of Goldman Sachs, Morgan Stanley, and Merrill Lynch at Wall Street’s high table.

In so doing, he’s swimming against the tide of UK and European banking. Its big guns, Deutsche Bank, RBS and the like, have been scaling back their ambitions in this sphere, sometimes quite radically.

It's in America that banks still like to have retail banks sitting alongside investment banks. Even Goldman Sachs has been dipping its toes in the water with Marcus, a newish venture that created quite a noise in Britain with its launch of a chart topping savings account.

The theory behind this is that retail banks tend to get stressed at different points in the economic cycle to investment banks. The one thus cushions the other.

Of course, there were examples of pure play retail, pure play investment, and all things to all people universal banks falling flat on their faces in the financial crisis.

But in more normal times, it's a valid strategy and the market will decide which it thinks works best.

Therein lies Mr Staley’s biggest problem, because the market isn’t yet buying his universal bank.

While Mr Bramson doesn’t appear to have found much support among other investors, Barclays shares still trade well below its ‘book’ value, in other words, below the value of its in force businesses. That’s not a happy position to be in.

The warning about cards, and consumer debt, was designed to remind investors that retail banking can be risky too and that they might ultimately have cause to cheer Barclays Investment Bank.

It's not just his bank that has cause for concern about plastic, either. We all do.

Consumer borrowing has been growing at a far faster clip than real incomes in this country and that could have consequences every bit as nasty any of the exotic financial instruments investment banks play around with going pop.

Perhaps Barclays could take a lead in taking its foot off the gas?

[drylatt] 26/9/2018 11:28

Very interesting and thorough article. There are a lot of question marks around the strategy but the one that really jumped out at me was squeezing greater returns from the IB without growing the capital allocated to it. A teezer to think about.

[bernie37] 26/9/2018 11:02

Jes Staley Stakes Barclays’s Future on Investment Banking

[johnwise] 26/9/2018 09:45

EU, China and Russia in move to sidestep US sanctions on Iran

The European Union, Iran, China and Russia have set out a plan to sidestep unilateral US sanctions designed to cripple the Iranian economy and force the Iranians to renegotiate the nuclear deal signed in 2015.

[johnwise] 26/9/2018 09:19

Interview with Mrs May

Theresa May asked: what if MPs vote against Brexit deal?

Video

[johnwise] 26/9/2018 08:37

tenapen


Britain not wanting to offend the Regime

Video

[portside1] 26/9/2018 08:31

barcs 4 big investors to act on the useless liars and failures at the bank

jes and mc liar have failed just lied to investors at agms , for 4 years

the silence from these pair is truly amazing

its time for them to speak and make a statement on their misleading to holders

jes soon speaks out when its about non barcs .

break up barcs and get rid of the duds at the bank claw back bonuses paid on false information and a remuneration committee giving out these bonuses so that they will be rewarded , the bank is run by the directors to just milk it dry then move on

make no mistake they read these posts and grin

break up the bank

[tenapen] 26/9/2018 08:18

PS,
I agree with your comment about Iran also, johnwise.

[tenapen] 26/9/2018 07:22

Britain still doing business with terror state Saudi Arabia.

[johnwise] 26/9/2018 05:54

Britain still doing business with The Terror State of Iran..

UN Ambassador Nikki Haley on sanctioning allies doing business with Iran:

Video

[fjgooner] 25/9/2018 22:30

Same here. Never claimed a penny but contributed throughout life ...

... that reminds me of a time not long ago ....

[tenapen] 25/9/2018 17:17

Sorry i should have made it more obvious ! but it was a rhetorical question. I never expected you to go live in the north for two weeks and look for a job.

[hasin] 25/9/2018 17:05

Only a family of 10 here and no dole scroungers either.
edit- and all our off spring

[buywell3] 25/9/2018 15:27

I think the FTSE 100 is on the wobble

We IMO could be looking at 6800 retest in October ... possible 6500

[hasin] 25/9/2018 11:23

My sister retired for last 4 years is seething now she is sixty she has
to wait another 6yrs before she can claim her state pension,
having paid taxes for everyones benefits and never claimed herself.

[portside1] 25/9/2018 10:18

ken you are correct they get more for doing nothing .it must end

to rent a home today is on avge 700 a month they get it free those that work have to pay , it stinks its rotten and must end

[kenbachelor] 25/9/2018 10:11

Optomistic - When I reached 80 and wanted to retire, I was working as a part time accounts manager in what was then my son's business. A girl came knocking on the door, asking whether we had any part time jobs available as she was on benefit and wanted to earn a little extra. She came in for 3 hours each morning and we paid her £10ph, doing everything from inputting orders to helping with dispatch.

After a few weeks it became obvious that she was brilliantly clever, far cleverer than me and I decided to offer my job. We never got round to discussing salaries, because she said 'she didn't want to work more than 15 hours a week or it would affect her benefit'.