Barclays warns Govt against breaking up banks
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Barclays executives have warned the Government that breaking up its universal banking structure could force it to move abroad.
According to the Financial Times, chief executive John Varley said yesterday that the bank’s model had proved its resilience through the financial crisis, adding that evidence to justify break-ups would have to be “empirical, unemotional and thorough enough not to cause unintended consequences.”
When asked whether Barclays would move overseas if the Government went ahead with this strategy, Varley said: “We have planned carefully.”
While chairman Marcus Agius added: “I am sure all banks are considering what their options are.”
The paper says Barclays executives are saying privately that the bank would prefer to sell off its UK business and move its headquarters abroad than be broken up by the coalition.
The Government has appointed a commission on banking to spend the next year determining whether universal banks should be broken up into their retail and investment arms.
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Readers' comments (6)
LindsayH | 6 Aug 2010 10:42 am
Of course they will move overseas if that clown Cable gets his way. So will HSBC and the highest yealding hedge funds. Not quite sure where that will leave the plans to tackle the UK debt problem. But it is certain to hinder us rather than help us. Please Messrs Osbourn and Cameron, wake up and smell the coffee!
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Richard Brown, Managing Director, Moneynotion Limi | 6 Aug 2010 10:43 am
Have I remembered correctly that Barclays went cap in hand to the Middle East for money, instead of asking for Government help? If that is correct, then isn't it disingenuous to say, "the bank’s model had proved its resilience through the financial crisis?"
Frankly, any bank that wants to overlend, run the country into severe financial difficulties and then pretend it's above the rest is welcome to leave as far as I am concerned.
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Julian Stevens | 6 Aug 2010 11:25 am
Love them or loathe them, the banks are in many ways the backbone of the UK economy. Though many of them acted recklessly, it seems that most are now recovering, even Northern Rock, and the national exchequer may well get back the money it pumped into several of the banks to prevent them failing. Maybe breaking them up isn't really as good an idea as it may have appeared to be a year or so back.
Then again, if the FSA had done its job properly............
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Frank | 6 Aug 2010 11:39 am
Corporate bank bully boys shaping Government policy by threats like this is just wrong. I think the Government should call there bluff, there is no doubt that investment banking and retail banking do not belong in the same company. So if i had any say in it, i would say take your business wherever you want but in this country you do it our way
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DaveG | 6 Aug 2010 11:52 am
@Richard Brown
agree entirely with what you say.
It's the usual blackmail statement ie "if we don't get what we want we will go "- well I for one would be delighted to wave them goodbye.
People forget that basically banks are " skimmers" ie they don't generate they skim off profits from those who do as their financial transaction pass through the banks very fine net.
If you don't believe that then start by reading the marvelous book " The Greed Merchants " This was written by an ex banker Philip Augar well before the crisis which was brewing broke through to the surface
Here's an extract from the Forward... " By being able to act simultaneously for buyers,sellers and themselves they are able to generate huge returns - returns Augar shows , concealed by cross subsidies,opaque prices,and a division of spoils between the investment banks' employees, shareholders and the corporate executives who give them business"
It's easy to write an ex post analysis of the market as many have done. The people you should be listening to are those who were honest enough, informed enough and perceptive enough to write about a problem in advance of it becoming public knowledge.
Philip Augar come into that category and you should read this if you are serious about being an informed and independent thinker
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DR E O Selim | 6 Aug 2010 12:05 pm
Fully agree with Richard Brown. John Varley thinks that being saved by his friends the oil sheikhs of Abu Dabie and Qatar is clever cover up. But it shows that Barclays is another flop like those who were saved by Taxpayers' money.
From personal experience I know that Barclays is MESSY and that arrogant Varley can't run a corner shop effectively.
Failing banks should not be aided and, surely, a clean government should not surrender to blackmail by Varley or any of the other failing banks' chiefs - let them go anywhere they like- after all there are too many banks in this small island. for more, visit:
http://hankybanky.webs.com
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