Barclays faces first criminal charges from financial crisis. FT Opening Quote, with commentary by Matthew Vincent, is your early Square Mile briefing. You can sign up for the full newsletter here.
Almost nine years after Barclays first raised billions from Qatari investors to help avoid a government bailout during the financial crisis, and after two missed deadlines for a deciding whether criminal charges should stem from the deal, the Serious Fraud Office has taken action: the bank, its former chief executive and three of its other ex-senior executives have been charged with fraud.
The SFO charged Barclays with three counts of conspiracy to defraud and false representation over its arrangements with the Gulf state.
Also charged were John Varley, Barclays’ former chief executive, Roger Jenkins, the rainmaker who put the deal together, Tom Kalaris, who worked with the head of the investment bank, and Richard Boath, who headed up corporate finance for the bank.
These represent the first criminal charges in the UK to be filed against a bank and its former top brass emanating from activities during the financial crisis.
Several of the bank’s most senior bosses – including former chief executive Bob Diamond were interviewed under caution. Such questioning, when an individual is warned about his or her right to silence — is distinct from witness interviews, and signals that investigators consider the individual a potential suspect in a criminal probe.
Last month, the Financial Conduct Authority said it had to delay in its own probe into the fundraising after the bank belatedly turned over thousands of documents that needed to be reviewed.
The FCA reopened its case this year after reviewing new evidence. It had made draft findings in 2013 that the bank should pay £50m for misleading and incomplete disclosure; something the bank denied and vowed to fight. But the FCA had to stay its case pending the SFO’s criminal inquiry.
After a rather shorter wait – of four weeks – investors in Touchstone Innovations, the backer of UK university scientific research, will discover whether rival IP Group is going ahead with a £460m all-share offer for their business.
Under the Takeover Code, IP Group has until 5pm today to either announce a firm intention to make an offer or walk away. And some big shareholders common to both companies – including Invesco, Lansdowne Partners and Woodford Investment Management – have indicated that they favour a combination to create a £1.4bn science investing powerhouse.
But Touchstone’s board has rejected the bid, saying it undervalues its portfolio of early-stage ventures and risks an exit of talented, highly specialist investment managers. It will depend, therefore, on whether Touchstone’s most recent investment prospects made the case for independence, and changed shareholders’ minds. Invesco, Lansdowne and Woodford control 75 per cent of Touchstone and over half of IP.
And, after just two weeks and a few pages of relative praise from analysts at Canaccord, builders merchant Wolseley has lived up to its reputation as the one UK operator in this sector performing well.
Analysts suggested Wolseley had been the exception to the wider rule, driven by a strong US business. And this morning it said sales growth had accelerated at the start of the second half of its financial year. Thanks to construction demand in the US, profits grew by 9.5 per cent.
Revenues in the three months to April 30 were 16.7 per cent higher than the same period last year, at £4.3bn. On a like-for-like basis, which excludes the impact of acquisitions as well as the weaker pound, sales were up 6.6 per cent.
The like-for-like growth rate was an improvement on the first two quarters of Wolseley’s financial year, and more than twice as fast as in the same quarter last year.
Wolseley has become increasingly reliant on Ferguson, its US arm,
which provided 87 per cent of its third quarter profits. At the end of
next month the whole company will be renamed Ferguson to reflect its
John Martin, Wolseley chief executive, said:
“Revenue growth in the quarter was good with US residential and commercial markets growing well and industrial markets improving… Since the end of the period revenue growth has been broadly in line with the third quarter, gross margins and cost control have been good. The group expects trading profit for the full year to be in line with current analyst consensus expectations.”
Beyond the Square Mile
Asia Pacific equities were mixed on Tuesday with Japanese stocks, supported by a softer yen, rising 1 per cent. In Australia, the S&P/ASX 200 was down 0.6 per cent. Hong Kong’s Hang Seng was down 0.1 per cent. Chinese equities were up slightly ahead of MSCI’s decision on whether to include mainland stocks in its benchmark indices, with the Shanghai Composite adding 0.1 per cent and the Shenzhen Composite gaining 0.5 per cent.
Foreign exchange markets were stable after an overnight rally for the US dollar. The Japanese yen was 0.1 per cent weaker against the greenback at ¥111.66.
The dollar index, which tracks the US currency against a basket of peers, was little changed at 97.507.
Oil prices were steady in Asia after sliding on Monday. Brent crude, the international benchmark, was flat at $46.90 a barrel after closing the previous session down 1 per cent. West Texas Intermediate, the US marker, was down 0.1 per cent at $44.16 after shedding 1.2 per cent on Monday.
Gold was up 0.2 per cent at $1,245 per ounce.
In the US index futures suggest the S&P 500 will be barely changed, when trading gets under way later in New York.
Corporate earnings for Tuesday include Wolseley and Hornby.
The economic calendar is light (all times London).
08.30: BoE’s Mark Carney speaks at Mansion House
09.00: ECB current account
The markets at 07:43
Nikkei 225 up +162.66 (+0.81%) at 20,230
Topix up +11.18 (+0.70%) at 1,617
Hang Seng down -75.06 (-0.29%) at 25,849
S&P 500 up +20.31 (+0.83%) at 2,453
DJIA up +144.71 (+0.68%) at 21,529
Nasdaq up +87.26 (+1.42%) at 6,239
Eurofirst 300 up +13.27 (+0.87%) at 1,541
FTSE100 up +60.27 (+0.81%) at 7,524
CAC 40 up +47.41 (+0.90%) at 5,311
Dax up +136.22 (+1.07%) at 12,889
€/$ 1.12 (1.11)
$/¥ 111.53 (111.48)
£/$ 1.27 (1.27)
€/£ 0.8758 (0.8751)
Brent Crude (ICE) up +0.01 at 46.92
Light Crude (Nymex) down -0.03 at 44.17
100 Oz Gold (Comex) up +1.20 at 1,245
Copper (Comex) down 0.00 at 2.59
10-year government bond yields (%)
CDS (closing levels)
Markit iTraxx SovX Western Europe at 19.9bp
Markit iTraxx Europe -1.89bps at 55.57bp
Markit iTraxx Xover -6.48bps at 231.65bp
Markit CDX IG -1.53bps at 59.97bp
Sources: FT, Bloomberg, Markit