Sir Fred casts a dark shadow

By Alex Brummer for the Daily Mail
Updated: 03:55 EDT, 20 May 2011

Banquo's ghost in the shape of Sir Fred Goodwin haunted the unveiling of the Prudential Regulatory Authority at the QE2 in Westminster.

The PRA promises greater transparency in the policing of banks than the predecessor regime.

But because of the antics of Goodwin and other former senior Royal Bank of Scotland executives the public has still not been provided with the regulatory background and the boardroom decisions which led the taxpayer to pump £45bn into the bank and to grab an 80pc plus stake.

The stupid thing is that Goodwin has little reputation to preserve any longer. His strategy of going to the courts to protect the content of his private life - and where it may have impinged on the public interest - has been blown away by Parliamentary privilege.

Deputy Bank of England governor Paul Tucker points out that the new bank regulators have much to learn from the past.

But why rely on the failings of BCCI and Barings when the much more relevant and up to date reports from RBS, HBOS and Bradford & Bingley are still outstanding? What is clear is that the new regulator will not stand for the kind of obstructions put in place by RBS.

In future, reports on failings by watchdogs and institutions will be published.

Indeed, there was even a suggestion that the regular health checks on the leading banks - based around five different levels of intervention - might be published. If that doesn't prove possible for reasons of confidentiality then the PRA is likely to look for the release of far more detailed quarterly returns.

The real bore for Stephen Hester and the team at the RBS is that they cannot rid themselves of the shadow of Goodwin and the hubris which went with the ancien régime.

It prevents RBS from getting closure and makes it harder for the government to sell down the taxpayers stake.

Pru reject

Talking of closure, it is possible that investors in the Prudential may soon get some satisfaction over the failed bid for Asian insurer AIA.

Pru has put up an impressive trading and stock market performance since the fumbled £22bn bid and rights issue.

But the company has never been able to shake off the impression that chairman Harvey McGrath allowed a then-neophyte chief executive Tidjane Thiam to go off unprepared on a wild goose chase.

Now he looks to be paying the price with the 22% vote against his re-election at the annual general meeting together with heavy abstentions.

That is one of the strongest rejections of a FTSE 100 company chairman in recent times. It is a massive vote of no confidence in an arena where chairmen get a notoriously easy ride.

Pru moved to strengthen its board last October with the choices of Sir Howard Davies and Paul Manduca post the AIA debacle. Now it needs to follow up by ditching McGrath and swiftly choosing a successor.

Some may unkindly feel that Davies has dealt himself out because of his past dealings with the autocratic Gaddafi clan.

That would leave Manduca.

Funny money

Successful flotations on both sides of the Atlantic should be a cause for market celebrations. But both give some cause for pause.

In London the personal riches created by Glencore's stock market listing continue to raise questions about the way in which the natural resources and commodities merchant makes its profits.

Glencore's domination of certain commodity markets, including wheat, at a time when high prices are giving rise to such economic and social dislocation in parts of Africa, and upheaval in Egypt and Tunisia, is uncomfortable.

And the company's mineral extraction in the wild west of Africa's copper belt also is worrying.

Nevertheless, it has managed to attract investors from around the world, including UK long-term funds like Standard Life, which perhaps should know better.

On the other side of the Atlantic, the initial public offering for the irritating LinkedIn website - which seems to be populated by business people who one has no interest in making friends with - received a frenzied reception.

The shares soared in initial trading, conferring a price of £6bn on the company. That is 40 times last year's sales and compares with four times the price-sales ratio across Wall Street.

Such valuations look to be very hard to justify and will raise fears of a second internet bubble.

What is astonishing is that after the events of 2000, when the dotcom boom turned to bust, the market is still uncertain about how to value online enterprises.

What is wrong with old fashioned profits, earnings per share, PE ratios and prospective yields? Too fuddy-duddy one supposes.