Without a dividend cut, the new BT chair should not hang up on Gavin Patterson, Barclays sits on the fence and San Leon prospects

 
Mark Kleinman
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The arrival of a new chairman at BT Group has prompted understandable questions about the future of its CEO (Source: Getty)

Like Premier League managers, most FTSE 100 chief executives are only a couple of big losses from the sack.

So after a year punctuated by an embarrassing fraud in Italy, a record Ofcom fine for late installations and ongoing struggles in its enterprise businesses, the arrival of a new chairman at BT Group has prompted understandable questions about the future of Gavin Patterson.

Yesterday’s second-quarter results suggest that Jan du Plessis shouldn’t be reaching for the trigger, though.

BT’s consumer-facing operations continue to show decent performance, it has avoided the dividend cut feared by investors, and an announcement later this month about future retirement arrangements should (along with yesterday’s base rate increase) smooth a path to reducing its vast pension deficit.

Some of the arguments against Patterson have been specious.

Read more: BT's new chairman backs CEO

It would be unreasonable, for example, to lay the blame for the scandal at BT’s Italian Global Services operation at his door. PricewaterhouseCoopers, the auditor, has been fired, and executives’ bonuses – including that of the chief executive – clawed back or cancelled.

Those actions seem to have convinced the board that Patterson has the requisite grip on events.

Indeed, du Plessis has insisted to shareholders in preliminary meetings that replacing Patterson is not on his agenda.

And while you would expect any new chairman to say as much, absent a U-turn on the dividend there are plenty of FTSE 100 chief executives likely to walk the plank before the BT chief.

Barclays sits on fence

Branch closures? Tick. Call centre queues? Sure. Ring-fencing plans? Come again?

Chances are that Sir John Vickers’ structural blueprint for the future of British banking is not uppermost in the minds of many Barclays customers.

Anyone using one of the bank’s ATMs, however, is now being greeted by a message inviting them to learn more about the most radical reform to hit the industry for decades.

Barclays has already boasted that it will be fully operational in ring-fencing terms by next Easter, eight months ahead of the statutory deadline.

And the board of Barclays UK is gradually taking shape.

In addition to John Timpson, founder of the eponymous high street chain, I understand that the ring-fenced bank’s non-executives will include Kathryn Matthews, an investment professional who spent the latter part of her career in Asia for Fidelity International.

Read more: Barclays shares fall: Here's how four City analysts reacted to its results

Matthews is no stranger to UK boards, serving as a non-executive director of Rathbones and the BT pension scheme.

The full slate of directors is likely to be finalised shortly, giving investors an early glimpse of what a demerged Barclays retail bank board might look like.

A more radical split of the group is unlikely to be formally considered until issues including a mortgage-backed securities mis-selling fine from US authorities is finally behind it.

Shareholders’ perpetual disappointment over the performance of Barclays’ investment bank is only likely to fuel a desire for the cosmetic split provided by ring-fencing to become a more fundamental break-up.

San Leon prospects

It’s an immutable law of mergers and acquisitions that the smallest deals can prove the toughest nuts to crack.

So it appears to be proving with San Leon Energy, the Alternative Investment Market-listed oil explorer which has been in an offer period for longer than it takes an oil tanker to sail across the world’s oceans.

Investors have, unsurprisingly, been losing patience with the company, which has seen its shares slump by nearly half in the last 12 months.

An 80p-per-share indicative offer last December from Geron Energy Investment, a Chinese group, was followed six months later by China Great United at a value of up to 76p per share.

Read more: Oil prices sink back below $57 a barrel

Neither has resulted in a formal bid, and the shares are now trading at below 25p.

However, I understand that Eroton, San Leon’s operating partner at its main Nigerian asset, has become the latest suitor to propose a takeover.

With market chatter suggesting that a reserves upgrade may be on the agenda, San Leon shareholders may finally be about to see their minnow of an oil tanker start to deliver.

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