Barclays (BARC)

BARCLAYS (BARC)

Some call it aggression while others see it as chutzpah.
Depending on your outlook, the in-your-face style of American capitalism can grate or elate.
Take Barclays chief executive Bob Diamond.
Big bad Bob from Massachusetts became Public Enemy Number One when he told Limey politicians criticising his extravagant pay to kiss his ass.
Newspapers and the public were quick to round on him … until they remembered that they hated politicians more than bankers, and moved on to the next hate figure.
In spite of his perceived brashness, Bob’s Yankee schtick could be good for investors.
This is the man who made a killing picking over the bones of Lehman Brothers, and built Barclays’ investment banking business almost single-handed – a bloke you need in your corner when the chips are down.
Barclays shares have been on a downer of late.
They took a knock when Diamond immediately agreed to pay out £1bn PPI compo – despite the “say sorry and move on” strategy being seen as a PR coup, and the other banks copying it.
Then the Treasury revealed plans to make banks insulate their retail operations from investment arms in a bid to avert future crises – a very costly business.
In the face of this, upbeat Diamond has hatched a plan to double return on equity by 2013 through job cuts and a push to bring in an extra £6bn in revenue.
He’s also eyeing a swoop for the Spanish mutual Caja del Mediterraneo – a bold move in such a toxic economy.
Banks are unpopular and Barclays is cheap – unfairly so, given that it didn’t need a taxpayer bailout.
The PPI hands-up was suggestive of good management that “gets” the public mood and knows when to rein in that American-style fighting instinct.
For those who reckon Diamond has earned his stripes, Barclays could be a star performer in the long-term.

STATS
At 261p and with a PE of 8.7, Barclays is valued at £32.8bn.
EPS has been rising since 2009 and is forecast to reach 40p by 2012. Analysts see yield rising to 3.7%, giving a dividend of 8.82p.