Yes, the Barclays Libor affair is turning out to be a very big deal. A majority of you now think that Bob Diamond will be forced to resign because of it. Martin Taylor, former CEO of Barclays has said that the Libor fixing was symptomatic of, “systematic dishonesty.” George Osborne says Bob Diamond has, “serious questions” to answer when he appears before Treasury Select Committee. Major shareholders are calling for, “senior executives” to resign, although some are said to prefer that Marcus Agius goes rather than Bob as an Agius departure would be rather less damaging.
Meanwhile, deferred stock bonuses at Barclays that haven’t been clawed back have declined 17% today – and counting. For those involved, the loss of bonuses may ultimately turn out to be the least of their worries. Osborne is promising to review the criminal law to see if there are any gaps in the way the government deals with the Libor probe.
Separately, this is also a bad day for anyone working at hedge funds. The Eurpoean Securities and Markets Authority has finally published its consultation on pay at hedge funds and private equity firms. There are two documents, here and here. We haven’t looked at them in detail, but a few things stand out.
Firstly, ESMA is recommending that between 40-60% of pay for significant staff should be deferred. Secondly it says guaranteed bonuses should only be paid in exceptional circumstances. Thirdly, it says, obliquely: “Any payment made directly by the AIF to the benefit of the selected staff which consists of a pro-rata return on any investment made by those staff members into the AIF should not be subject to any of the remuneration requirements.”
This latter statement seems to point to one thing: a very high proportion of future pay in hedge funds and private equity funds will be derived from returns on the investments employees have made in their employer. Co-investing is already common, but if ESMA’s plans come to pass it will be even more common in future.
Three years after Barclays embarked on its great (and expensive) Asian expansion plan; the firm still struggles to compete against rivals. As one analyst puts it: “There’s no strategy, everybody’s an MD.” (Reuters)
Libor: “Look, it’s Barclays, oozing repentance.” (Financial Times)
Yes, Barclays is going to need several £100m to cover Libor lawsuits. (Alphaville)
Citigroup, JP Morgan, Deutsche Bank, HSBC and RBS are all said to be being investigated for LIBOR rigging too. “This is the most corrosive failure of moral behaviour I have seen in a major UK financial institution in my career,” said Lord Myners in relation to Barclays. (BBC)
In May, JPMorgan said it had lost $2bn. It’s June and the final loss may now be $9bn. Half of the trade has been exited. (DealBook)
James Gorman says Philip Purcell is wrong to say Morgan Stanley should be broken up. (Bloomberg)
Bank of America is trading at 60 percent of its tangible book value, while Citigroup is at 52 percent. (Bloomberg)
Macquarie has hired 14 people to its US equity sales and trading team based in New York and Boston. (Wall Street Journal)
G-Sessions, Goldman’s electronic bond trading platform, is go. Trader redundancies to follow shortly.(Financial Times)
Credit Suisse shares hit a 20 year low yesterday. (Reuters)
Marex Spectron has increased its headcount from 210 people in December 2010, to 592 now. (Financial News)
Some asset management firms will simply wither away into nothing and all their people will leave. (Financial News)