Schroders’ Buxton ‘engaging’ with Barclays over its fine
Top-performing UK manager, an investor in Barclays, is in dialogue with the bank to try to understand its Libor manipulation fine.
Schroders’ £2.7bn UK Alpha Plus fund manager Richard Buxton has said he is in contact with Barclays - an investment in the fund - to try to fully understand revealations that it attempted to rig market interest rates.
Mr Buxton, head of UK equities at Schroders, had a 1.8 per cent weighting in Barclays at end-February.
The bank’s shares plunged as much as 17 per cent in trading yesterday as it emerged its staff had attempted to manipulate wholesale interest rates, which govern the multi-trillion dollar interbank lending markets.
“As long-term shareholders in Barclays on behalf of our clients, as you would expect we are engaging with Barclays to understand fully the nature of the current situation,” said Mr Buxton.
“It would be premature to comment further until we have undertaken this work.”
Elsewhere, Henderson Global Investors’ UK equity manager Stephen Peak described the regulators’ statement on the issue as “extremely concerning”.
“The fine is a little over 1 per cent of yesterday’s market capitalisation yet the share price (at time of writing) has fallen 16 per cent,” he said.
“This reflects both 1) the reputational cost, but as we point out below, Barclays is first in the firing line but are by no means alone and 2) the “on costs” of legal action, e.g. class actions are in theory considerable given that the Libor market is many hundreds of trillions.
“However, our guess at this stage is that it will prove challenging for claimants to be meaningfully successful. Nevertheless this cloud could hang over Barclays for some time.”
Barclays was fined a record £290m by US and UK authorities.
The UK banking giant admitted to attempting to fix the published rates of the London Interbank Offered Rate (Libor) and the Euro Interbank Offered Rate (Euribor) - key benchmarks of the rates at which banks lend to each other in wholesale markets - over a number of years.
The bank said top staff including chief executive Bob Diamond would waive their bonuses in light of the giant fines, but pressure was mounting on him at the time of going to press as chancellor George Osborne said he still has questions to answer over the scandal.
Schorders’ latest factsheet shows Mr Buxton is underweight financials with a 15.3 per cent weighting compared with the benchmark FTSE All Share Total Return’s 20 per cent.