There was a broadly positive response from the commentariat on Thursday to Barclays’ £4.5bn ‘partially firm’ share placing. With the shares yielding 11 per cent – and with a promise of cash – the bank looks a roaring buy, notes the Telegraph’s Questor column, by way of example.
And the structure of lining up Sovereign Wealth Funds alongside what are effectively institutional underwriters, then offering new stock at just a small discount, has drawn something close to applause. “A neat solution to the problem, providing both certainty of outcome and some limited protection of pre-emption rights,” the Independent’s Jeremy Warner says in his Outlook column.
But as Julia Finch points out in the Guardian’s Viewpoint column, if Barclays had bitten the bullet in April, when Royal Bank was first to realise that it was in denial, its shares were trading closer to 500p – 50 per cent higher than they are now.
Indeed, with chief executive John Varley and BarCap boss Bob Diamond having spent months insisting the bank did not require fresh capital, we should perhaps remind ourselves what exactly Barclays has been doing with shareholders’ money over the slightly longer term.
Go here to the investor relations section of Barclays’ website.
It’s a list of Barclays share buy backs between August 6 last year and January 31, 2008. Almost £2bn was spent at prices ranging from 680p down to 430p, with an average of 585p.
With most of the new stock now being issued on offer at 282p, do the management not feel a little remorse at having squandered so much money at a time when the credit crisis was already in full swing?
One other point. Insisting on paying the 11.5p dividend in cash means sending more than £900m back to shareholders this summer – including the new lot who have just put up new funds. At best that is mindlessly inefficient. What it actually looks like is a stupidly expensive exercise in image management.
Messrs Varley and Diamond either need more capital, or they don’t. Either way, they need to manage it better.
Related links
Qataris take up to 10% of Barclays – FT story
Barclays statement