Finance Matters

Posts Tagged ‘Barclays’

If you’re looking for a data point that shows a shift in compensation culture on Wall Street and you took a quick look at the headline of this Bloomberg article, you might think you’ve found it: “Bonuses Met Wall Street Workers’ Expectations, Survey Shows.”

According to an email survey of 1,006 financial sector employees by eFinancialCareers.com, 56 percent said their bonus met or exceeded their expectations.

So, it sounds like Wall Street is beginning to accept that a different pay scale will be the norm, right?

Not really. The survey only measured expectations. As a result, it speaks more to the lengths Wall Street employees went this year to convince themselves that their pay was going to be terrible than to any absolute measure of satisfaction with that pay.

Is Wall Street really happy with 20 to 30 percent pay cuts, less cash and more restricted stock that vests over a period of years? Probably not.

Do they think that outcome is better than being fired or getting nothing? Yes! And that’s is precisely the news this survey delivers.

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• Lazard Warns Wall Street: Deferred Comp Is No ‘Free Lunch’
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• Another One Bites The Dust: Barclays To Cut Banker Pay By 25%-30%

One of the notable themes in financial markets early this year is the “dash for trash.”  Specifically, many of the asset classes that sold off in 2011 have been rebounding sharply since the beginning of 2012.

The Egyptian stock market, which got obliterated last year, posted a monster 27 percent gain in January.  Unfortunately, Egypt is seeing its stock market sell off sharply due to horrific violence in the region.  However, the “dash for trash” theme has been holding up in much of the rest of the world.

Below is a chart from from Barclays Capital’s European equity strategy team that has the one-month and 12-month performance of the world’s major stock market indices.  This is an easy way to visualize the 2012 “dash for trash” theme.

Of course, no theme is perfect and is without its anomalies.  As you can see, Portuguese and Spanish markets are underperforming.  Meanwhile, some indices that did well last year continue to do well.  These outperformers include the Thai, Indonesian, South African, and U.S. stock markets.

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• A Sign Of The Extreme Hunger For Risk Right Now…
• JP MORGAN: We’re Still Bullish, But Stocks Might Go Nowhere For The Next 3 Months
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US Airways has confirmed that it has retained Barclays Capital and Millstein & Co., among others, to explore a possible takeover of AMR, the bankrupt holding company of American Airlines, Douglas Parker, the company’s CEO said on US Air’s fourth quarter conference call.

The response comes after reports surfaced last week that the company was exploring options to make a bid for the carrier.

“So while its no longer imperitive that our industry consolidate, we are of course always interested in exploring value enhancing deals,” Parker said on the call.

He announced the news in an attempt to head off questions on the call, when the company reported sharply higher earnings than analysts had expected.

For the fourth quarter, US Airways said it had net profit excluding special charges of $21 million, or $0.13 per share. Wall Street sell-side analysts forecast earnings of $0.03. The company also topped revenue guidance, at $3.15 billion for the quarter — $10 million higher than predicted. 

Full year results were also strong at the Tempe, Arizona, based airline, with revenues of $13.1 billion, up 9.6% year-on-year. Net profits excluding one time charges were $111 million, down 75% from 2010.

Shares are up more than 14% on the news.

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• American Airlines May Have Just Found Its Knight In Shining Armor
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So, the bidders in today’s Spanish and French bond auctions were unfazed by last Friday’s S&P downgrades of 9 European sovereigns.  Demand was healthy and yields were low.  And credit default swap spreads in both countries tightened, reflecting a decline in perceived credit risk.

Overall, the major European stock markets haven’t really budged since before the auctions.

France’s CAC 40: up 0.6%

England’s FTSE 100: down 0.0%

Germany’s DAX: down 0.2%

Spain’s IBEX 35: up 0.4%

Italy’s FTSE-MIB: up 0.5%

It is however worth noting that the big European banks are going gangbusters.

Deutsche Bank: up 4.8%

Societe Generale:  up 5.7%

Banco Santander: up 1.8%

Barclays: up 4.3%

RBS: up 4.0%

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See Also:

• European Markets Are Going Nowhere Ahead Of Crucial French And Spanish Bond Auctions
• The Big Economic Data That Will Move Markets On January 18
• WHOOPS: Europe Rally Collapses After Bloomberg Corrects Report About IMF Funding Boost

Consumer group Which? is calling for unfair overdraft charges to be stopped after finding that charges are too complicated and impossible to compare.

Which? asked a number of volunteers to calculate how much an unauthorised overdraft would cost at RBS-NatWest, HSBC/First Direct, Lloyds, Barclays, Halifax, Nationwide and Santander.

The volunteers, who included a maths PHD student, were only able to calculate seven out of 48 charges correctly.

The study found that there is a wide discrepancy between the overdraft charges levied by different banks.

First Direct and HSBC charged the highest unauthorised overdraft fee – at £150 a month, while Barclays would charge just £66.

However all of the charges were so complex that it would be impossible for most people to work out the best deal.

Which? also criticised banks for charging high daily fees which can equate to an APR of over 2,000 per cent.

The consumer group is calling on the Government to give the new financial regulator, the Financial Conduct Authority (FCA), sufficient power to stop banks levying excessive and complex fees.

The FCA, which will take on responsibility for enforcement and conduct from the Financial Services Authority, is expected to have the power to oversee the design of financial products.

Peter Vicary-Smith, Which? chief executive, said: “The regulator must be a strong, open and proactive watchdog that stands up to the banks, not a lapdog”.

In related news, Virgin seems to have backtracked on its plan to charge for all its current accounts.

The move would have meant customers currently using free-if-in-credit accounts having to start paying around £60 a year in fees.

The plan was revealed by Virgin Money’s chief executive Jayne-Anne Gadhia in an interview with the Daily Mail, but Sir Richard Branson, chairman of the Virgin Group, has now commented that it would be “very unwise” to stop offering free current accounts.