Jolly good news for Barclays shareholders. Chief executive Antony Jenkins says the bank will not be paying more to top executives than it needs to.
This is in clear contrast to the last lot in charge there, whose approach at times seemed to be: here’s the cheque – you fill in the amount.
Mr Jenkins could hardly refuse the BBC’s offer to be a guest editor of Today, and the new year’s eve programme provided a perfect platform to explain why it’s all going to be different under him.
After what he bizarrely described as a “30-year shift to short-termism” in banking, greed is definitely off the menu. Mind you, he’s proposing to stay in those activities traditionally ruled by greed, and so will have to pay accordingly.
He would like the Barclays boys to think about the interests of its customers rather than merely about their own, and to prove that good banking is also profitable banking. This is such a challenge that even if he’s serious, and can take the rest of the top echelon with him, he’s likely to have gone long before it happens.
He reckons it could take a decade to change the culture, assuming that it really has started already.
Perhaps there is no latter-day equivalent of PPI mis-selling going on at present, or of viable small businesses being sent to the wall, or traders gaming the rules. Perhaps Mr Jenkins really has disbanded the department of tax fiddles, as he claims, but as John Kay gloomily put it in the programme: “It’s not archbishops who tell you they’re honest, it’s bankers.” Of course, it’s the editor’s decision when to run such critical comments – like before 6.30am.
Mining for the shareholders
Bad luck if you bet on miners and gold last year. Clever you if you stocked up on airlines. If anyone got that double, they’re keeping strangely quiet. A year ago gold was the low-risk insurance policy, while the airlines were at the mercy of dearer fuel, more taxes and cash-strapped consumers.
They still are, but the sea change (air change?) in the industry came with Michael O’Leary’s admission that there was a limit to the humiliation that Ryanair passengers would endure for cheapish flights to somewhere quite near their destination. They would pay for something a bit better. Service is hard to get right, but lucrative for the carriers if they do.
Gold, meanwhile, proved again that trying to value it is a game for mugs and bugs. Even while the world’s central banks are printing money like never before, the metal can endure an eye-watering bear market. While the gold miners can only hope that it doesn’t keep going, the base metal miners are, at last, embarking on some self-help after the excesses of the boom.
The talk at all the big houses is of projects postponed, businesses sold or efficiency drives. This is a slow process, needing painful write-offs and a period of repentance from previous excesses, but it generates prodigious amounts of cash. As that money starts to flow towards the shareholders, miners will be viewed as income stocks in a market where sustainable dividends become increasingly expensive.
A bear market in copper and steel would upset the ore-train, but continuing recovery in America and the start of one in the eurozone should sustain demand as it finally flags in China. The US can hardly fail to grow, driven by cheap oil and dirt-cheap gas from fracking, an energy revolution whose consequences will be profound. The investing lesson from last year is that gold was not the insurance policy it seemed. This year’s may be that mining useful things is quite attractive after all.
Productivity puzzle solved
If you’re struggling to understand why British productivity is so poor, then look around you and consider the past two weeks. With Christmas day falling on a Wednesday, the opportunity to faire le pont by bridging to le weekend becomes more like a pontoon, with working days broken into such short chunks that it’s hardly worth the bother of coming in. Not so much a lost weekend, then, as a lost fortnight, or almost 4 per cent of the year.
Neil Collins is a shareholder in Rio Tinto
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