How is it possible that we’re still reading headlines about the £4 billion fundraising from the Gulf that saved Barclays from a bailout in 2008? It’s not too sweeping to say that most of the financial world smelled something fishy in the undisclosed £322 million of advisory fees that were paid to Qatari investors – and that whiff never went away, despite the collapse of criminal charges against individuals at Barclays in 2019.
The Financial Conduct Authority has called the behaviour of Barclays ‘reckless and lacking integrity’, while recognising that the bank ‘is a very different organisation today’. But not so different as to actually acknowledge its fault: Barclays ‘does not accept the findings’ of the regulator but ‘wishes to draw a line’ by accepting a final £40 million fine to close the file.
The whole episode remains a stain on Barclays and a parable of the danger of urgent decision-making under market pressure. Most of all, it spotlights the failure of regulators and the law, over 16 years, to pinpoint precisely which acts or actors were culpable in a transaction that so many market practitioners felt in their bones had crossed a line of City propriety.
Bank-breaker
Scott Bessent, the New York hedge-fund player picked by Donald Trump to be his treasury secretary, is the man who ‘once broke the Bank of England’ – as Alternative Fund Insight puts it. Before establishing his own investment firm, Bessent was a protégé of the Hungarian-American speculator George Soros and a member of Soros’s Quantum Fund team that made $1 billion by shorting the pound on Black Wednesday in 1992.
Having studied the fragile state of the UK housing market, Bessent concluded that the British government had no stomach for the high interest rates needed to defend sterling – and reportedly urged his colleagues to double down on their bet. ‘We could push the Bank [of England] against the wall,’ he said later, and that’s exactly what they did.
Oh to eavesdrop on the first meeting between Bessent and ex-Bank of England economist Rachel Reeves. Meanwhile, I’m reminded that another Black Wednesday winner (possibly bigger than Quantum) was Joe Lewis, the Bahamas-based Tottenham Hotspur owner who recently pleaded guilty to US insider trading charges. With their shared experience of Manhattan courtrooms, perhaps Trump will offer Lewis a job too.
Mindset reform
To the Mansion House – they let me in despite last week’s banquet joke – for the Lord Mayor’s address to masters of City livery companies. The recently installed 696th incumbent is Alastair King, a venture capitalist turned wealth manager who faces the challenge of making an impact on the Square Mile in a single year – or fading into history like most of his predecessors except the pantomime legend-like Dick Whittington, who served three terms between 1397 and 1420 and may never have owned a cat.
King’s mayoral theme is ‘growth un-leashed’ and he’s eager to make that happen in financial services despite the City ‘driving with the handbrake on’ and ‘needing to fire on more cylinders’ (at this point, for some reason, he made me think of Mr Toad).Vital regulatory reform (to reinvigorate the London stock exchange, for example) may stretch across several mayoral terms, but King argues that’s no reason not to instil ‘mindset reform’ in the meantime: more energetic global salesmanship, more overseas acquisitions, more headlines about high-growth British businesses. Admirable aspirations: I wish him an open road.
Blacker Friday
Will you ‘pull a sickie’ for Black Friday? A survey by Rakuten – a ‘cashback and rewards provider’, whatever that is – found one in ten of a sample of 2,000 adults planning to damage their employers’ productivity by skipping work in order to spend at least £400, most likely on credit or buy-now-pay-later, in this US-import consumer orgy. What the survey doesn’t say is that they’ll be buying stuff they probably don’t need and which was not manufactured in this country, sold by giant retailers that use every trick to minimise UK tax bills as they drive smaller high-street competitors to the wall. Aggregate Black Friday sales may give the Treasury a gratuitous uptick in November’s growth figure, but there could hardly be a blacker day for the real economy.
Birthday toast
A very special lunch took place at The Spectator last week for the 90th birthday of Christopher Fildes, who was our business editor under Nigel Lawson’s editorship in the late-1960s and returned in 1984 to write more than a thousand of his celebrated ‘City & Suburban’ columns. Gathered to toast him were the former editors Charles Moore and Dominic Lawson, son of Nigel; Algy Cluff, who as our proprietor 40 years ago prompted Charles to invite Christopher back as a columnist; the former Bank of England governor Mervyn King; the current editor Michael Gove; and me.
The guest of honour recalled that in all the gyrations and reversals of financial markets, ‘human nature is the constant’ – which is what makes them fascinating to observers like us but is also why so many mistakes are repeated. Lord King, by his very presence, reminded us that Christopher was both a trenchant critic of the City when events demanded but also its most knowledgeable friend. And the assembled Spectator company personified the golden thread of continuity that makes this paper unique. The final Fildes column in the issue of 1 April 2006 ended with the words ‘Floreat Spectator’ – may it flourish. Thanks to good claret and Christopher’s command of Latin, our lunch ended even more confidently. Florebit for the new era: it will flourish.
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