Posted: 10/31 @ 09:10 pmBarclays chief Bob Diamond is banking on a quick return to huge profits
Bamboozling figures don’t help things. You can’t blame Barclays for the
cockeyed industry accounting – aka “debt valuation adjustment”
– that takes a bank’s own debt and not only repackages it as profit but one
that gets bigger the worse the situation gets. That added £2.97bn to
Barclays’ profits in the first nine months of 2011 – even if it was offset
by a £1.8bn writedown against BlackRock and a £1bn provision for PPI
mis-selling.
But what about the £559m net benefit from a hedge against low interest rates,
which so troubled the analysts? It’s not what you’d call high-quality
earnings – and it’s a big number in the context of £5bn pre-tax profits.
Improvements at the UK and African retail banks, corporate lending,
Barclaycard and wealth management show a business going in the right
direction. And Diamond has demonstrated his old trading skills in cutting
exposure to Spain, Italy, Portugal, Ireland and Greece by 31pc to £8bn.
But hitting the 13pc target still depends largely on £1bn of cost cuts,
economic recovery and, most of all Barcap – the business Bob built. Even in
a bad year, the investment bank is by far the biggest driver of profits – no
matter that they fell 19pc to £2.7bn in the first nine months.
In short, Diamond is banking on a quick return to the sort of world that those
Pink Floyd rockers sang about in another tune Money – one where you
could still “make a stash”.
You sort of hope he’s right, for the sake of economic recovery as much as the
Barclays share price. Even if, right now, such wishful thinking does seem
kinda crazy.
David Cameron must stop writing about infrastructure and start delivering it
Here’s one reason for the noise pollution around Heathrow airport: the howls
of anguish from Willie Walsh, of British Airways fame, and all the other
airline chiefs.
The reason? More disingenuous posturing by this Government over the importance
of new infrastructure to the British economy. David Cameron was at it again
on Monday, writing in the Financial Times about how “in terms of
future productivity” our “infrastructure deficit is as serious as
our budget deficit”.
That’s the same Cameron who took the politically expedient decision in the
run-up to the election to block a third runway at Heathrow – and has since
pretended that if he doesn’t think about the problem of new airport
capacity, it will simply go away.
As it happens, there are credible reasons for not building a third runway. Not
least that, to get the full benefit of it, you’d need a sixth and seventh
terminal – and that would involve knocking down Hounslow, which, come to
think of it, might be a reason to push ahead.
Not to have any sort of aviation policy whatsoever, though, is plane
irresponsible. If not Heathrow, which even Labour now opposes, then where?
The proposal by Mayor of London Boris Johnson for a new Thames Estuary
airport may run to tens of billions of pounds, but at least you could expand
it.
FTI Consulting, in a report admittedly commissioned by Gatwick airport, on
Monday claimed that the “do nothing” approach to runway expansion
could cost the British economy 15,000 jobs annually and up to £47bn in lost
economic benefits over the next 30 to 50 years. After 18 months in the job,
Cameron must stop writing about infrastructure and start delivering it.
alistair.osborne@telegraph.co.uk
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