Those intrepid American adventurers heading to London to explore the drama and meaning of Brexit, courtesy of the New York Times at $6,000 a pop, should strike the Barclays AGM off their list of attractions. The chief executive, Jes Staley, between apologies for his “mistake” in trying to unmask a whistleblower, made leaving the EU sound like a stroll in the park, at least for Barclays.
Staley didn’t put it exactly like that, of course. But he did say that the complexity can’t be compared with other recent hassles, such as setting up an intermediate holding company in the US to comply with local regulations, or establishing a ringfence around the UK retail bank. “Any of the options we might need to pursue are by comparison straightforward, and significantly less costly,” he said.
Staley, like all his counterparts, would like UK-based banks to stay within the single market for financial services but he’s prepared for other outcomes. None, on current thinking, would involve shifting British jobs or significant operations elsewhere. If capacity has to be added within the EU, Barclays will be able to do so because it has a decent smattering of offices across the continent.
Barclays’ tone on Brexit is wildly different from other big banks. Deutsche Bank, JP Morgan, Goldman Sachs and HSBC have been warning of various degrees of exodus from the City. Barclays, it might be said, has deep British roots and so is obliged to fly the flag for the City. Even so, these firms compete for the same clients and staff, and serve similar sets of shareholders, so you’d expect uniformity, or something closer to it.
Who’s right? Impossible to know until the final form of Brexit emerges and the banks can reassess on the basis of hard facts. If the EU insists that certain types of financial business take place within its jurisdiction, more jobs will plainly have to go.
But Staley’s point is that the most important factor will be financial firms’ ability to hire skilled staff from the EU and the rest of the world, and thus protect the network effect that has served the City well. In other words, immigration policy trumps pan-EU passporting rights. The next government, if it wants to protect the City, should take note. The immigration rules may well be the swing factor.
It’s jam tomorrow for TalkTalk
All hail Sir Charles Dunstone, the returning hero who knows what makes TalkTalk tick. That was the market’s thinking when the founder announced in February that his chairmanship would revert to a hands-on executive role on Dido Harding’s exit. The share price, after a horrible two years, quickly improved by a quarter.
Reality returned with a thump as Dunstone laid out his plans. In short, the path to “strong sustainable shareholder returns” will be long and winding. The dividend is being chopped in half and top-line profits will fall this year, even from the latest tally of £304m that was itself £16m short of target. The shares fell 7.5%.
Dunstone, sitting on a 31% stake, can afford to take the long view – indeed, is obliged to do so. TalkTalk has lost customers in the past two years and needs to stop the rot. That involves spending a few quid upfront to improve the network to attract broadband punters. Dunstone’s priorities will be “growth, cash generation and profit – in that order”. Fair enough. Jam tomorrow is better than less jam forever, which was maybe where TalkTalk was heading without corrective action.
But there are still unanswered questions. The mobile strategy is up in the air because TalkTalk won’t now build a mini-network of its own. And, while backing Dunstone is usually the way to bet, it’s a mystery why he didn’t make Harding adopt the new strategy two years ago on the first signs of trouble. It’s really his business, and he’s left himself a lot to do.
Pret’s bosses see dollar signs
Pret a Manger, in an attempt to hire more British workers, recently discovered that the UK has jobcentres. But it seems it hasn’t yet learned about our stock market. The company, owned by the UK private equity firm Bridgepoint, is planning a flotation in New York.
We can guess the real reason for preferring the US, of course: Pret is expanding rapidly there, and anything that looks fresh and exciting tends to attract a higher valuation in the US. But it is harder to understand why Pret requires such a mighty collection of investment banks – five of them – to draw up the plans. American investors, be warned: this ain’t Saudi Aramco, it’s a chain of sandwich shops.
