Blackett-Ord, founder and chief executive of Bovill, says YES
Investors will be concerned that cultural problems at Barclays remain. Since these alleged offences took place, there can be no doubt that the regulatory response to the financial crisis has been significant. In particular, a new regime has been implemented which has been designed to better hold bankers to account, to define their responsibilities more clearly, and to ensure that “bad apples” don’t move around the industry. But the regime is largely untested, as is the real will of regulators to hold individuals to account – perhaps until now.
Changing the way banks behave is not just about imposing new rules. It’s about ensuring cultural alignment, throughout the organisation, in effect ensuring that everyone “does the right thing”. This week’s arrests suggest that this culture, from top to bottom, may have been elusive at Barclays. Investors worried about long term damage should not focus on previous isolated events, or even the acts of particular individuals, but for more recent signs that the culture is – or, indeed, is not – changing for the better.
Richard Buxton, chief executive of Old Mutual Global Investors, says NO
The charges concerning Qatar relate to alleged fraud committed by former senior managers at Barclays. While clearly unhelpful from a sentiment perspective (and completely unacceptable, if proven, for a management team to behave in such a way), we think that the investment case at Barclays holds.
Barclays has battled hard over the last few years to extricate itself from a large book of business that under current regulations no longer generated sufficient returns. Of course, if the book didn’t work for Barclays then it didn’t work for anyone else either, so the price paid, in both time and money, has been painful for the bank and its shareholders. But we’re nearly there now. The core of the bank is achieving returns in excess of its cost of capital, and the non-core bank has almost reached de minimis levels.
With a valuation languishing at the bottom of the European peer group, we believe Barclays offers great value today.