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Late Lunchtime Links: Will Barclays Capital be forced to go it alone?

Yesterday's man

Yesterday's man

It’s always the way. No sooner had Barclays Capital ditched the second half of its name in the interest of closer integration with the rest of the bank, than the issue of secession is being raised.

At the very least, it seems people will seize upon the LIBOR scandal as a reason to implement Vicker’s proposals and ringfence Barclays Capital as soon as possible. At the most, a new CEO may conclude the commercial and retail bank would be better off without the investment bank attached.

“I would like to see them break the bank in two so you have a low-risk retail bank offering savings and loans and an investment bank where they’re using their own money to take on a lot of risk,” John Smith, a senior fund manager at Brown Shipley & Co, which owns Barclays stock, told Bloomberg this morning.

From a share price perspective, dispensing with Barclays Capital would seem to make sense.  “Barclays shares are trading at around 50% book value,” says banking analyst Bruce Packard. “It seems the retail bank and the commercial bank are being devalued by the investment bank, which is effectively negative equity.”

Unfortunately, full disassociation from the retail and commercial bank would not be good for Barclays Capital. In a note out today, analysts at Nomura say there are profitability issues at BarCap, adding: “We think ROE for 2011 was c 5% in BarCap on a Basel III basis, pre ICB impact.” They also estimate that Barclays needs to raise additional capital equal to at least 50p a share to meet fully phased-in Basel requirements.

Meanwhile:

Barclays, Lloyds Banking Group and Royal Bank of Scotland and others could have to pay £4bn each to settle LIBOR litigation.(Telegraph) 

Barclays’ unfortunate advertising campaign. (Twitter) 

If Bob Diamond doesn’t leave with his £30m, he could maintain his relationship with UK regulators and get a job with a US bank. On the other hand, he could retire. (Breaking views)

Is it the lone wolf, the cover-up, or the conspiracy theory? (William Wright) 

Most graduate recruiters look for a 2.1 these days. (Guardian) 

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