Principles are no match for money

Very few people in the City in the weeks before Christmas had a good word to say about Barclays.

The bank has refused to take money from the Government but has instead made its own private arrangements to get new capital from the Qataris. Barclays ignored the principle of pre-emption rights, which holds that when a business needs new capital existing shareholders are given first choice on whether to subscribe.

At the time incensed institutional investors promised one of two things. If it emerged that in spite of protestations to the contrary, the business was in as much trouble as the other banks, then the head of chief executive John Varley would roll. If it turned out that the business was fine Varley would be safe, but it would still be the case that the board had cut out shareholders and put itself in hock to Middle East interests, so the head of chairman Marcus Agius would roll.

But when the Barclays AGM duly came round last week neither happened. There were no voices raised against Varley and while there was a protest vote against the chairman - Agius gained only 84 per cent support for his re-election - this seemed nothing compared with the scale of the alleged offence.

Corporate governance activists tried to present it as a major slap on the wrist for him on the grounds that in such re-elections a normal vote would be 99 per cent in favour. But what the vote really means is that sentiment has been turned round.

Even if privately they still don't agree with what Barclays did, shareholders have shown they are prepared to go along with it. This must be seen as a major triumph for Barclays' communications.

Or was it? In the past few weeks the Barclays share price has recovered from a January low of around 50p to more than 200p. One suspects this act of enrichment influenced voters every bit as much as the honeyed words from management. This suggests depressingly that even when there is a major principle at stake, nothing works better in the battle for the hearts and minds of City folk than stuffing their pockets with money.

Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Already registered?
Sign in